Norway economy doing well, bankruptcies hit 25-year high
Staff Writer |
More than 5,000 Norwegian stock-held companies declared bankruptcy last year.
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It’s the highest number since 1993, and it puzzles analysts because Norway’ economy is otherwise doing well.
“We have some problems explaining the high bankruptcy numbers for 2018,†Per Einar Ruud of the data and analysis company Bisnode told newspaper Dagens Næringsliv (DN) on Monday.
“The overall picture of the Norwegian economy is, after, quite positive. The average company in Norway is doing well and most folks have money to spend.â€
Despite a bright outlook for the economy, Bisnode’s figures show that a total of 6,288 companies went konk (as the Norwegians would say, an abbreviation for konkurs) last year, which also set a record during its first half for forced dissolutions of businesses.
That subsided in the second half, but the total number of bankruptcies was nonetheless startling. Most of them occurred within the hotel and restaurant branches, followed by retail establishments.
Ingar Nordmo Olsen, a lawyer in Tromsø who specializes in bankruptcy administration, points to a change in the stockholding law in 2012, in which capital requirements for setting up a stock-held firm in Norway declined from NOK 100,000 to NOK 30,000.
“We have seen that many entrepreneurs don’t have enough start capital and land in a liquidity squeeze,†Olsen told DN. It’s become easier to start a company, he noted, and those with just NOK 30,000 (USD 3,500) are vulnerable to higher costs and projects getting delayed.
“There’s always a lot of bitter souls after a bankruptcy,†Olsen said. “It’s a crisis for most. Folks are left without work. Maybe they’ve used up all the money they had in the company. We’ve had a lot of adults sitting in despair here in our offices, and most are entrepreneurs and hard-working business folks who simply didn’t succeed.â€
DN reported that the county of Sogn og Fjordane had the biggest increase in bankruptcies, up 33 percent, followed by Aust-Agder with 19 percent and Østfold with 14 percent. Trøndelag had the biggest decline in bankruptcies, down 13.6 percent.
“It’s difficult to predict what will happen in 2019, but the retail segment is going through a lot of restructuring,†said Ruud of Bisnode. He noted, on the positive side, that the portion of Norwegians with trouble paying their bills did not increase, “so we’ll likely keep spending money, but perhaps on other things.†■