Though less companies declared bankruptcies in 2021 than in 2022, a hike in numbers in Q4 suggests the trend could continue into 2023.  Romain Gamba / Maison Moderne

Though less companies declared bankruptcies in 2021 than in 2022, a hike in numbers in Q4 suggests the trend could continue into 2023.  Romain Gamba / Maison Moderne

Luxembourg saw the number of closing businesses explode at the end of 2022, despite a year that had promised to be more positive.

A total of 1,050 bankruptcies and 846 liquidations were declared in the grand duchy over 2022. Bankruptcy occurs after a company can no longer pay its debts or meet its commitments. Judicial liquidation refers to the procedure of cessation of activity or dissolution of the company, which can happen after a bankruptcy for example.

These numbers were down compared to 2021, when 1,160 companies shut their doors and 1,008 were liquidated, but Luxembourg’s statistics bureau Statec in its yearly review notes that despite an overall improvement, a drastic increase in cases over the fourth quarter could be a sign of worse things yet to come.

 compared to 2021 “hides a sharp increase in the 4th quarter of 2022,” Statec says. In October 2022, 141 bankruptcies were declared, compared to 102 in 2021 and 148 in 2020. November saw 113 businesses shut down, against 83 in 2021 and 118 in 2020. In December 2022, numbers even exceeded the cases registered in 2020, reaching 134. There had been 71 in 2020 and 120 in 2021.

The 388 bankruptcies declared in the fourth quarter therefore reached “record levels for a final quarter,” says Statec in a statement published on 12 January, adding that “it remains to be confirmed whether this is a pure catch-up effect or whether the phenomenon will increase in the coming months.”

Over the year as a whole, the 1,050 bankruptcies resulted in the loss of 2,059 jobs. This is a stable figure according to the Statec, which stresses that it does not yet have the final figures for employment. On the other hand, the branches most affected by job losses in 2022 are construction, non-financial service activities and Horesca (with 38%, 31% and 18% of job losses respectively).

Liquidations also exploded during the final months of the year, going from 28 in September to 92 in October, 87 in November and 99 in December.

The construction sector (118), trade and servicing of car businesses (198), hospitality and restaurants (115) and holding and placement funds sector (275) registered the most bankruptcies for 2022, Statec data shows.