The IWH Bankruptcy Research Unit collects the bankruptcy announcements of German courts to generate the monthly IWH Bankruptcy Update. Excluding very small firms being not listed in the business register, the Update focusses on a group of legal forms of companies typically covering about 90% of all employees affected by employer bankruptcy. Official statistics draw a comprehensive picture of the situation with a two months delay. The Update is considerably faster and only marginally deviates from official numbers. The IWH Bankrupcty Update therefore is a reliable flash indicator for corporate bankruptcy in Germany.
When a company files for bankruptcy, it takes on average two to three months for the courts to announce the start of bankruptcy proceedings. Only then does the bankruptcy appear in the IWH Bankruptcy Update and, with a further delay of two months, also in the official statistics. To provide the public with even more up to date figures, IWH researchers additionally draw on bankruptcy filing data to forecast official bankruptcy announcements for the coming two months.
For some of our analyses we link the bankruptcy announcements of the courts with firm-level data provided by Bureau van Dijk (BvD), the latter comprising balance sheet and employment information. The BvD data is highly reliable for large firms whereas many small firms are not included. For this reason, our analyses using BvD data focus on large companies, only. Here we take account of the fact that consolidated balance sheets of parent companies may include subsidiaries that are not bankrupt. Employment reductions mostly occur within the last year before bankruptcy. Our balance sheet and employment information do not refer directly to the time of the bankruptcy announcement but mostly to the previous year and thereby provide a more realistic picture of the economic effects of bankruptcies.