Alarming insolvency figures: small businesses in danger!

Alarming insolvency figures: small businesses in danger!

On April 23, 2025, AKV Europa reports on the alarming development of insolvencies in Austria. The new figures show that the economic situation for many companies, especially small businesses, is extremely tense. According to published statistics, in 2024, over 54% of companies whose assets were transferred to bankruptcy proceedings fell into the category of micro-enterprises. These figures are supported by the discussion in the Ministry of Justice about an EU proposal to harmonize insolvency law.

The proposal includes, among other things, a “pre-pack procedure” and a simplified insolvency procedure for micro-enterprises. These changes are controversial since over 90% of the corporate bankruptcies filed concern companies with fewer than 10 employees. These are often one-person companies. An alarming aspect is that in more than 60% of cases there are no employees left at the time of bankruptcy.

The debt burden of companies

The situation is further exacerbated by the fact that around 61% of the affected companies have debts of less than 500,000 euros. A third of all insolvencies affect unregistered sole proprietorships, which are also often micro-enterprises. Of the corporate bankruptcies in 2024, with a total of 4,156 cases, 1,424 (34.26%) were in individual companies that were not recorded. A worrying trend is that many personal bankruptcies affect former self-employed people who continue to struggle with the financial consequences of their business closures.

The AKV expresses strong criticism of the planned EU directive, especially the simplified procedure for small businesses. The concern is that these changes will result in a loss of control over key operations and give less back to creditors. The AKV warns that the existing insolvency system in Austria must not be allowed to deteriorate. The start-up costs for insolvency proceedings in Austria are around 4,000 euros, which further increases the financial burden on companies.

Total number of bankruptcies

The numbers illustrate the drama of the situation: Of the 2,612 insolvency dismissal decisions due to lack of assets, 1,734 (66.39%) concerned individual companies that were not recorded. These sole proprietors were still running a company at the time of the declaration of insolvency, which is why the proceedings were handled as company insolvency. In addition, almost a third of the 8,821 personal bankruptcies are attributable to “ex-entrepreneurs” who settle their liabilities from failed self-employment. Debt relief often only occurs many years after the company has been closed.

Overall, the 2024 insolvency statistics show that company insolvency proceedings in Austria are handled professionally, quickly and efficiently. However, it remains unclear how the new regulations will affect the already precarious situation of small businesses. The AKV therefore appeals to decision-makers to take the challenges facing companies seriously and to develop constructive solutions to stabilize the insolvency system in Austria.