The Creditreform study, published on 6 February, reveals that the number of bankruptcies in the Grand Duchy fell by 13.2% in 2008 compared to 2007. Indeed, with only 590 bankruptcies, the number of failed companies in 2008 stood at a five year low. The figures are all the more impressive when compared to Luxembourg’s neighbours where the number of bankruptcies rose in all three countries – France +15.1%, Germany and Belgium both +7.9%. Nevertheless, some sectors of the economy have been adversely affected by the downturn in 2008 – the construction industry, for example, suffered 71 bankruptcies in 2008 compared to 49 in 2007.

But the most significant increase in bankruptcies in Luxembourg was noticed in the retail trade, which accounted for 33.4% of failed companies in 2008 (compared to 26.8% in 2007). The authors of the Creditreform study says that the increase of failures in the retail trade – some 197 companies filed for bankruptcy last year – was due to perennial problems of market positioning and unsolved succession.

Notable bankruptcies cited in the study include that of multimedia retailer Topvision Luxembourg SA, which enjoyed turnover of 40 million euros in 2007 and employed around 55 people, IT service provider Premisphere SA, which left some 90 workers seeking new employment and PIN Group SA which employed around 5,000 workers internationally and had an estimated turnover of 227 million euros in 2007.

Creditreform warns that the figures should not be viewed with too much optimism. Since October the number of bankruptcies in the Luxembourg jurisdiction has risen by 30% - an indication that the crisis is hitting the real economy faster than at first expected. The Diekirch jurisdiction has been relatively stable, but the authors were not willing to predict how 2009 will develop.