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Bankruptcies rise as coronavirus bail-outs phase out

The number of companies and individuals declaring bankruptcy rose 9.1% last year, which coincided with a gradual withdrawal of state-backed financial support during the Covid-19 pandemic.

Some 14,081 businesses and individuals filed for bankruptcy in 2021, which is 1,169 more declarations of insolvency than in 2020, the Federal Statistical Office said on MondayExternal link.

The large increase in bankruptcies can be partially explained by the withdrawal of financial measures that were introduced when the pandemic struck in 2020.

This included payments to cover wages for workers on reduced hours and emergency loans backed by the state. In addition, implementation of bankruptcy laws was eased to allow companies more leeway before they were obliged to declare insolvency.

However, these measures have been phased out in stages, which has removed the financial safety blanket propping up some failing companies that struggled to recover from the economic shock of the pandemic.

Financial losses resulting from bankruptcies in 2021 amounted to CHF4.2 billion ($4.5 billion), which is higher than the CHF3.3 billion average in the previous 17 years.

Some CHF1.7 billion resulted from three unusually large bankruptcy cases, the Federal Statistical Office said, without naming the affected parties.

In the first few months of this year, the situation appears to be getting worse. Company bankruptcies increased 40% in January and February compared to the same months in 2021, says the Swiss association of creditors, Creditreform.

Creditreform says it expects company insolvencies to increase by more than a quarter for the whole of 2022 compared to 2021.

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