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 percent 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.
While official statistics report bankruptcies based on the date of the court decision about opening a bankruptcy trial, the IWH Bankruptcy Update uses the date of the courts’ public announcement of this decision. Hence, deviations from the official statistics also depend on the reporting behaviour of courts.
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.