Covid bankruptcies: Swiss liquidators speed up hiring
As employers lay off and lay off staff in an attempt to stay afloat during the Covid-19 pandemic, an employer in Switzerland has launched a recruitment drive: the Zurich liquidation service.
This content was published on November 17, 2020 – 4:35 PM
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A worrying sign of what could be happening to us, the service has quadrupled the number of employees who visit closed businesses, take inventory and collect assets that can be sold to pay creditors.
The Ascot Hotel and the Swissôtel in Zurich are among the companies that have already closed permanently after the evaporation of reservations. More hotels, restaurants and bars are on the brink as government support measures end.
Beat Vogt, head of the notary service in the government-run Zurich liquidators service, said they were preparing for an expected increase in the number of liquidations next year, hiring 12 new employees who began their training in November.
“It will be so important that our system wouldn’t be able to cope without the extra support. We have to be prepared, ”he said.
The number of bankruptcies in 2020 is, however, one-fifth lower than in the previous three years, according to Creditreform, the Swiss association of creditors, because emergency credit guarantees and deferral of social security payments in companies helped get through the early stages of the pandemic.
Switzerland is a good example of the story unfolding across Europe, with countries like Great Britain, France and Spain also seeing a sharp drop in bankruptcies this year. The German Institute for Economic Research (DIW) also predicts a significant increase in bankruptcies in Europe’s largest economy next year after a decline this year.
“This is a situation at European level where companies have been supported by such measures, but some of them are coming to an end. As a result, there will likely be more bankruptcies next year – Switzerland is not alone in reducing its measures, ”said Jan-Dominik Remmen of Deloitte.
‘The tip of the iceberg’
In Switzerland, measures such as the temporary lifting of the obligation to report excessive debts have now expired.
“The number of companies that have collapsed so far in Switzerland is just the tip of the iceberg,” said Creditreform Chairman Raoul Egeli.
“There are a lot of businesses here that are just zombie businesses,” he added, referring to businesses that would struggle to cover their debt payments in normal times.
Egeli expects above-average Swiss bankruptcies next year, while Peter Dauwalder, head of restructuring at KPMG, said the number could double to 800 cases per month as the crisis accelerates structural changes in many sectors.
Some 60% of Swiss companies were experiencing lower demand, according to a recent survey by the KOF Swiss Economic Institute, while 10% feared for their survival.
Remmen at Deloitte also noted that a “good” number of bonds and credit facilities are due to be refinanced next year, with risk premiums typically significantly higher than pre-Covid levels and refinancing costs making more. that double towards the lower end of the credit spectrum.
“There will be liquidations or bankruptcies if a company is no longer able to support its debts and cannot obtain fresh funds,” he said.
Meanwhile, Beat Vogt from Zurich is gearing up for a busy start to 2021. “It’s a question of when and how bankruptcies occur rather than if,” he said. “It’s our goal to be prepared for whatever happens.”