Michael Bretz

Michael Bretz

"There is a big cultural problem," says Michael Bretz, research director at German credit-rating group Creditreform."In most of Europe, bankruptcy is seen as ruin."

Overcoming such resistance could take a long time, though, and in the meantime, 2003 is shaping up as another grim year.French business insolvencies in January and February were running 25% above the same period in 2002.If that keeps up, the wave of bankruptcies could become a tsunami.

"Banks are no longer willing to prop up shaky companies," says Michael Bretz, an analyst at Creditreform, a German rating agency.

If there's any good news, it may be that a new insolvency law encourages companies to seek protection from creditors while there's still a chance to restructure and survive.For Stuttgart-based gourmet grocer Böhm, insolvency means it can get out of long-term leases and close unprofitable stores.Managers can now declare insolvency when they see a liquidity crisis looming rather than being forced to wait until it occurs.That may allow Berlin-based Herlitz, a maker of office supplies founded in 1904, to crawl out from debt built up through unprofitable acquisitions such as a stake in a Russian paper plant.Herlitz plans to focus on its core business, which is still healthy.

Creditreform - Michael Bretz - Phone: +49 3131 109-171 - m.bretz@verband.creditreform.de

"Banks are no longer willing to prop up shaky companies," says Michael Bretz, an analyst at Creditreform, a German rating agency.