Hardly a day goes by without the German fashion and shoe industry being shaken by another bankruptcy announcement. The Textile Shoes Leather Goods Trade Association (BTE) fears that the wave of insolvencies could damage the image of the fashion and shoe trade, according to BTE Managing Director Axel Augustin in a statement on Thursday.
The current spate of bankruptcies is having a noticeable impact on all companies in the industry. Augustin points to possible difficulties in hiring good employees, who may opt for another industry, but also the possibility that important suppliers in the textile and shoe industry will themselves be driven into insolvency due to missing payments or orders could become.
The BTE managing director also addresses the annoyance of a number of retailers in the industry. According to the statement, some suspect that insolvent companies want to restructure themselves at the expense of third parties. If this were the case. this would also affect the competitive position of healthy competitors at the expense of the general public. Medium-sized companies in particular would also fear that non-profitable business models would be artificially kept alive by debt relief through insolvency. This would also prevent the absolutely necessary market adjustments.
While Augustin lists these fears, worries and criticisms of the dealers and explains them as comprehensible, he also concedes that every insolvency is regulated by law. He also points out that even delaying an application for insolvency is a criminal offense and that there is comparatively little room for maneuver when it comes to the requirements and deadlines. Bringing about insolvency in the short term is also hardly possible.
The question of guilt
The BTE sees the blame for the current wave of insolvencies less with the companies than with politics. This must take a good part of the blame for the current situation. The large companies in the industry suffered disproportionately from the restrictions imposed by the pandemic. In addition, they were not initially granted any bridging aid, which meant that they had to resort to loans to continue to exist.
According to the announcement, the payment they received towards the end of the pandemic was significantly lower than the losses incurred, while medium-sized companies received bridging aid in the double-digit percentage range of sales. The current imbalance was therefore to be feared in many cases in advance.