>>
Allianz also expects insolvencies to
soar in Australia (29%), South Korea (26%), and Singapore (26%), but it’s a different story elsewhere in the Far East, with negligible or no change in China (1%) and Hong Kong (0%). In countries where businesses did not
enjoy a significant level of pandemic government support, insolvency rates are not tending to surge. This is true in much of Africa, says Amaechi Nsofor, head of Africa, insolvency and asset recovery at Grant Thornton. “Support did not exist in the first place
so it hasn’t created a huge artificial comfort blanket that needs replacing,” he says. “There’s always been an insolvency crisis in Africa and non-performing loans have always been very high. Being 10–15% higher now doesn’t really make that much difference.” But governments in Africa have, as a
result of the pandemic, run down their foreign reserves on palliatives such as food, says Amaechi. They don’t have enough left to “go into the market to buy up and defend their own local currencies”, putting inflation out of control, he says. A more significant trend stabilising
insolvency numbers across Africa is a pan-continental shift away from liquidation to restructure and rescue businesses. “Previously the approach in places like Nigeria and South Africa was to focus on the local domestic recovery options,” says Amaechi, “but those countries and banks have now fully exhausted low-hanging fruit in terms of going after local debtors, so I’d expect a shift to cross-border/ international efforts.” A likely result of this is a swoop by
vulture funds – such economies need outside interest to give them the infrastructure they need but without that infrastructure they can’t attract the interest. But outside influence or support costs – bringing opportunity to buy distressed businesses to turn around. “Pan-African banks and development financial institutions are crying out for funds to buy up their non-performing loans,” says Amaechi. “Distressed debt investors stand to make a quick buck in Africa.” Despite the Allianz forecast of 8%
insolvency growth in the US in 2022, the business bankruptcy rate has, according to a report by the Administrative Office of
CISI.ORG/REVIEW
the U.S. Courts, fallen 18.7% in the past year. The report shows the number of insolvencies declined from 16,140 to 13,125 in the 12 months to September 2022 – thanks largely to a combination of the Paycheck Protection Program (a US$953bn federal package which, although ended a year ago, still entitles many borrowers to ‘loan forgiveness’) and America’s initially spectacular fiscal bounce back – its 5.7% economic growth in 2021 was the fastest since 1984. At the height of the pandemic, most
national governments were propping up small businesses. An OECD survey of 55 states, published in May 2021, shows 91% deferred corporate tax, 87% offered loans, and around two-thirds offered support with energy costs and debt moratoria. The removal of such support has
been compounded across the world by continuing supply chain disruptions, transportation delays, goods shortages, high energy costs, and a global surge in inflation. Yet there are reasons a flood of insolvencies may not happen – at least, not yet. The Allianz report points to the global total cash holdings of listed firms being 30% higher at the start of 2022 than in 2019, and deposits of non- financial corporates being 29% higher in the eurozone and 57% higher in the US. The report also suggests the number of ‘fragile firms’ (firms at risk of insolvency in the next four years) has decreased across Europe – most
// LIQUIDITY HAS NEVER BEEN AS CRITICAL //
>> 31
IMAGE: ISTOCK
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72
