Few companies going bankrupt despite recession; More need help

Despite an economic recession, relatively few companies are going bankrupt in the Netherlands. But entrepreneurs are facing problems, and more are seeking help, NOS reports after speaking with aid organizations that help businesses in trouble.

While the number of bankruptcies has been increasing for a year, it is still much lower than in previous recessions. In the past 12 months, Statistics Netherlands counted 3,123 bankruptcies - three times less than in 2013, when the Netherlands had just emerged from two recessions caused by the credit crisis.

The low number of bankruptcies is surprising given the large number of entrepreneurs - around 193,000 - struggling with tax debts from the coronavirus period. It is clear that many entrepreneurs are struggling to keep afloat, aid organizations told NOS.

Over Rood, an organization where 200 expert volunteers offer advice and assistance to struggling entrepreneurs, reported a big increase in customers. In 2020, Over Rood started 607 aid trajectories. This year, the counter is already at 1,465.

Dozens of entrepreneurs contact the Chamber of Commerce (KvK) daily to ask for help, Ge Gijssen, a business advisor at the KvK, told NOS. “It is often not even the entrepreneur himself, but a partner or a mother who is concerned about tax debt or rent arrears. Sometimes, a listening ear is enough.” The KvK refers those needing more help to Over Rood or the Entrepreneurial Sounding Board, where advisors help around 3,000 entrepreneurs annually. Gijssen thinks that the available support contributes to the low number of bankruptcies.

Geldfit Zakelijk, an initiative launched during the energy crisis to provide advice on money matters, also told NOS that the requests for help are rising. Municipalities, debt counselors, creditors, banks, and insurers refer people to Geldfit Zakelijk. Founder Ralph van Dam told NOS that traffic on the site and the helpline is increasing rapidly.

The SME Helpline, set up by the Institute for Small and Medium-sized Enterprises (IMK), receives about 200 weekly calls. And about 500 entrepreneurs a week do the online scan to gain insight into their company’s financial health.

IMK director Michiel Hordijk told the broadcaster that Dutch businesses have more help available, and the nature of that help has changed since the credit crisis (2008-2013). At the height of the credit crisis in 2011, over 9,000 entrepreneurs were in debt restructuring. Since 2020, that’s been around 1,000. Things are being handled differently now, Hordijk said. “We often focus on a liquidity agreement with creditors like the UWV and Tax Authorities. That allows us to avoid high bankruptcy costs.”

Joris Knoben, a professor of entrepreneurship at Tilburg Univeristy, agrees that the available help keeps companies afloat. “There seems to be more social awareness about the position of entrepreneurs. Attention to debts and aid also plays a role.” But that does not alter the fact that many companies have been struggling for some time, he said.

The professor warned against too much optimism. “There are signals that the number of bankruptcies will increase in certain sectors. That includes overrepresentation in the catering industry.”