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Germany: Turnaround Playing field - not ready for a crash

4 November 2016

1. Fundamental data since the beginning of 2016 points towards an economic crisis - without even taking into consideration the consequences of Brexit. Due to the overall debt-level, the global economy will enter into a recession in the short- to- mid term, possibly not even gradually but with a shock. This recession will not spare the German economy.

2. Even if the level of that crisis only reached those of the last financial crisis, the fundamentals on which German enterprises  base their business planning would deteriorate so fast that their "business continuation prognosis" (which is important to avoid the insolvency ground for over-indebtedness) will most probably be gravely endangered.

3. The situation of such enterprises could be aggravated by the fact that most banks have considerably reduced their "work-out-branches" in the previous years and that they will probably sell distressed loans quicker to funds than before. The latter meaning that more often than before opportunistic, and more difficult to assess,  investors would participate in turnarounds.

Full article can be read here (in German). 

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