Almost 5,000 Danish companies went bankrupt in the first seven months of 2019, figures from the research company Experian indicate, and the trend isn’t anything new (see graph below).
More than half of them are based in the capital region.
There seems to be a solid explanation behind this ever increasing number of firms being pushed into insolvency.
“The sharp increase is partly due to the law requiring the registration of real owners,” explained James Færgeman, a consultant manager at Experian.
“Last year in November, the Business Authority took nearly 7,500 unregistered companies to probate courts and forced them into dissolution. This has led to many bankruptcies in March and April this year.”
The silver lining
“Although the individual bankruptcy can be a sad story, it is important to remember that from an economic perspective, bankruptcies are a healthy market mechanism,” said Kristian Writes Sorensen, an economist at the Danish Chamber of Commerce.
“Bankruptcies occur when less efficient companies are outperformed by more efficient firms. This means that resources in the economy are better utilised, and it is good for the economy as a whole.”