This is the paradox of the Covid-19 crisis: while French GDP fell by more than 8% in 2020, the number of bankruptcies has considerably decreased. According to a count made by franceinfo, some 24,000 procedures for business failures (that is to say placed in reorganization or liquidation) were opened in France in 2020 – a threshold at the lowest for 30 years – against around 40,000 in 2019 and in 2018.
>> INFOGRAPHICS. Which companies have been saved from bankruptcy by state aid?
How to explain this phenomenon ? “The support from the State has been strong, it has done the right thing” to enable companies to get through the crisis, underlines Thierry Millon, director of studies at Altares. Today, the cost of aid to businesses (loan guaranteed by the State, solidarity fund, partial activity, etc.) is in fact estimated by Bercy at 11 billion euros per month. But if the low number of bankruptcy filings is “good news for all employees and business leaders who have been spared“, it is a “optical illusion” since“it does not reflect the health of companies “, notes Thierry Millon.
With the gradual lifting of aid between June and August, not all of the companies that held their ground in 2020 will survive. According to an Altares note published in March, 63,000 companies, already weakened before the crisis, “will resist (…) with difficulty the end of aid”. These structures, called “zombies”, have in common to survive “thanks to state support and low interest rates”. With the cessation of aid, they will see their risk of failures increase, while it is already assessed, apart from the pandemic, as being “2-3 times higher” to that of other commercial companies.
“The aid measures have enabled businesses affected by the crisis not to file for bankruptcy, but they have also enabled businesses that should have failed in normal times to stay alive.”Julien Marcilly, chief economist of the credit insurer Coface
Other companies, which did not encounter any major difficulties before the epidemic, are also likely to be concerned, because they had to go into debt to keep up, in particular by having recourse to loans guaranteed by the State (PGE). So much so that a “wall of debt” now worries some economists and business leaders, who fear that companies, caught by the throat, are finally forced to go out of business.
Because with the lifting of aid, companies will once again have to pay all salaries, but will also have to pay social charges postponed since spring 2020, and soon begin to reimburse PGE. All this, while it may be more difficult for them to finance themselves, given their balance sheets in 2020 which often show losses. Proof among others that the future situation promises to be complicated: eight out of ten companies that went before the commercial court in the first quarter of 2021 were directly sent into compulsory liquidation in view of their deteriorated financial situation, against only two thirds in time normal note Altars.
“At some point, the crisis will have to be expressed”, thus estimates the economist Lionel Nesta, researcher associated with theFrench Observatory of Economic Conjunctures (OFCE), which relies on a “phenomenon of massive inflows of bankruptcies well before the end of the year if we leak at the end of the summer”. For his part, François Asselin, president of the Confederation of Small and Medium-Sized Enterprises (CPME), feared at the end of April sure BFM Business “between 65,000 and 100,000 failures” in the year following the end of the support measures. same the European Central Bank alerted states on “the threat of a wave of insolvency” companies in a report (PDF in English) published at the end of April.
Despite these alerts, panic does not seem to have spread to Bercy, which is far from sharing the same analysis. “We had been told 900,000 job cuts, there were 300,000. We had been told the ‘wall of debt’, we are still waiting for it. We had been told of many bankruptcies, and there are some. had less than previous years “, we slip into the cabinet of Bruno Le Maire.
“The reality is that everyone is playing scared.”Bruno Le Maire’s cabinet
Same story on the side of the Bank of France. “Yes, some of the business support created additional debt for them, but half of the businesses that used the PGE have spared it, so they have free cash. And the EMP allows companies to choose a repayment spread until 2026 “, welcomes Frédéric Visnosvky, the credit mediator. He also emphasizes that several indicators of economic recovery since the beginning of May are encouraging. On the other hand, he says he is more worried about shortage of raw materials and the recruitment difficulties in hotels and restaurants, which could slow down the recovery.
However, it is out of the question for the government to risk the disaster scenario. The new extension of 15 billion in aid announced Tuesday, June 1 aims to avoid the dry cut this summer for companies in difficulty. In addition to existing aid, a transition fund endowed with three billion euros to support companies meeting financing needs and a facilitation of debt restructuring for small structures are planned, announced Bruno Le Maire and Olivier Dussopt, the Minister in charge of Public Accounts, in an interview with Echos. An assessment of the overall aid system must be drawn up at the end of August. Butur France 2, the Minister for Small Businesses, Alain Griset, ruled “possible” that the most affected sectors benefit from support until the presidential election in April 2022.
If the sustainability of aid is welcomed by economists interviewed by Franceinfo, they nevertheless insist on the need to reduce the wing by restricting them to companies that were viable before the crisis. “Ideally, the government should only help companies which will be competitive in the long term and which will bring about economic growth”, emphasizes Lionel Nesta. A task far from easy, because it induces a very high cost of analysis. Here too, the government must specify its device on Tuesday. In particular, it should mobilize the quotes carried out by the Banque de France, but also the Weak signals system, whose algorithm is supposed to make it possible to detect companies in difficulty at an early stage.
So, should we expect cascading bankruptcies? Difficult to be definitive. “We are in a period of great uncertainty “, recognizes Julien Marcilly, chief economist of the credit insurer Coface. Like others, the institution provided, in a note of June 16, 2020, “a wave of failures (…) inevitable in the second half of 2020”. But the wave never arrived, state aid having ramped up over the same period.
“Our job is to forecast, and we focus on doing it. When we see that our forecasting models are not working, we try to revise our approaches.”Julien Marcilly, economist at Coface
Since then, Coface has changed its forecasting model and now takes state aid measures into account. According to his new calculations, 22,500 “missing” bankruptcy filings in 2020 “should materialize gradually by 2022”, mainly in the construction sector (8,600), hotels and restaurants (3,000), commerce (1,800) and manufacturing industry (1,500).
“At the same time, there will be fewer failures than feared a year ago and they will occur more gradually than anticipated”, summarizes Julien Marcilly. More than one “vague” bankruptcy, Thierry Millon, of the Altares firm, now believes that France will face “a sustainable swell” which will force business leaders to “remain attentive (…) because the turnaround in better conditions is not expected before 2023”. But all are now very cautious: there is no question of being the harbinger of bad news that does not come again.