Austria is seeing a sharp rise in business bankruptcies this year due to ongoing economic struggles. In the first nine months of 2024, the number of companies going bankrupt is expected to increase by around 25%, with nearly 4,900 businesses predicted to file for insolvency, according to the Austrian credit protection agency, KSV1870.
Larger companies are also feeling the pressure. The number of big bankruptcies with debts of more than 10 million euros has doubled compared to last year, going from 27 to 55 cases. A major example is the bankruptcy of the Austrian branch of U.S. electric vehicle maker Fisker, which has debts of 3.79 billion euros.
The total amount of debts from bankruptcies in the first nine months of 2024 has jumped to 14.8 billion euros, a massive 683% increase from the same period last year.
Companies Struggling to Survive
Karl-Heinz Götze, the head of the insolvency department at KSV1870, explains that many companies are under significant pressure and are often operating on the edge. This difficult situation continued even during summer, which is usually calmer. He does not expect things to improve any time soon and predicts that the number of bankruptcies by the end of the year could reach 6,500, the highest since the 2009 financial crisis.
Some companies are so financially strained that they can’t even afford to go through the bankruptcy process. More than a third of all bankruptcy cases haven’t been officially opened because the businesses couldn’t raise the 4,000 euros needed to cover court fees. In these situations, creditors—people or companies owed money—usually get nothing back.
Which Sectors Are Worst Affected?
The trade, construction, and gastronomy sectors have been hit the hardest. So far this year, 853 businesses in the trade sector, 814 in construction, and 596 in gastronomy have filed for bankruptcy. These three sectors combined account for nearly half of all bankruptcies in Austria.
Private Bankruptcies Also on the Rise
It’s not just businesses that are feeling the economic strain. Personal bankruptcies are also expected to rise slightly. Between January and September 2024, there were nearly 6,700 personal debt settlement cases—a slight increase of 0.7% compared to last year. By the end of the year, around 9,200 personal bankruptcies are expected, which would be about 400 more than in 2023.
Inflation and Rising Costs
Götze believes personal bankruptcies could increase significantly because inflation has made life more expensive. While people have shown some financial resilience, how long this can last is unclear. Götze advises anyone facing financial difficulties to file for bankruptcy as early as possible to prevent their debts from spiraling out of control.