Continued rise in bankruptcies – but improvement is in sight

The number of corporate bankruptcies in Sweden has increased by 28 percent so far this year. But despite the alarming figures, the situation is less serious than during both the 1990s crisis and the financial crisis, and a more positive trend is also expected.

Over the past two years, bankruptcies in Sweden have increased continuously, month by month. So far this year, bankruptcies have risen by 28 percent and the annual forecast remains bleak – it is estimated that just over 9,800 companies will have filed for bankruptcy before the end of the year, according to a report from Creditsafe.

“Pandemic, war and energy crisis have led to effects in the form of inflation, recession, interest rate shock and weak currency – Swedish companies have continued to have an extremely tough time,” says Henrik Jacobsson, CEO of Creditsafe, noting that the number of bankruptcies has increased over the 25 consecutive months.

Not alarming from a historical perspective

The construction industry, retail, hotels and restaurants are the industries that have had the highest number of bankruptcies this year, while real estate companies, car dealers and consulting agencies are those that account for the highest percentage increase compared to the previous year. But despite the worrying figures, the situation is not alarming from a historical perspective.

"To get an accurate picture of the situation, we also need to compare what proportion of the total number of Swedish companies the number of bankruptcies corresponds to. Last year the proportion was 1.08 percent and the forecast for 2024 is 1.27 percent. This should be compared to the proportion of companies in bankruptcy during the 1990s crisis being 5.8 percent and during the financial crisis 1.8 percent," says Camilla Frimmel, at Creditsafe.

Bankruptcy trend on the way to leveling off

Creditsafe predicts that the bankruptcy trend may begin to level off, and that the economy will eventually recover, albeit at different rates depending on the industry. A future lower interest rate environment and increased real wages may also contribute to more stability in the long term.

"The number of payment notices on limited companies is an indication of how hard Swedish companies are hit and we currently see that the number of payment notices is increasing but that the rate of increase has slowed down somewhat compared to last year. Companies are finding it a little easier to pay now than a year ago and this indicates that the bankruptcy trend is also leveling off," continues Camilla Frimmel.

How the used market is affected

When companies face financial challenges and need to sell assets, the company's cars are often supplied to the used market. The vehicle fleet is generally one of the larger assets and the current situation is leading to an increased influx of used vehicles on the market, which in turn affects the supply and therefore also price levels. In addition, the automotive industry is an industry that is particularly hard hit by bankruptcies right now.

"Over the past two years, we have seen an increase in the number of cars sold due to insolvency and bankruptcies. The strength of our marketplace is that it is open to everyone and with bidders from Sweden and abroad - companies as well as private individuals - we feel confident that the prices of the cars we sell are in line with the market regardless of the economic situation," says Daniel Odsberg, Sales Manager at Kvdbil .