German Companies Face Insolvency in 2025 Due to Labor Shortages and Financial Strains
Two German companies from NRW and Baden-Württemberg have filed for insolvency in 2025 due to labor shortages, rising interest rates, and liquidity issues, highlighting specific business challenges over general economic downturns.
- • Phoenix Engineering GmbH in NRW filed for insolvency owing over 2.6 million euros to subcontractors, with employees unpaid for months.
- • Rising interest rates, strict credit policies, and project delays impacted Phoenix Engineering’s liquidity.
- • Ringat Präzisionstechnik GmbH in Baden-Württemberg filed for insolvency due to inability to replace retiring skilled workers, despite stable order volumes.
- • Both companies are seeking restructuring or investors to sustain operations post-insolvency.
Key details
Two German companies from different sectors have filed for insolvency in 2025, each citing specific business challenges rather than a general economic downturn as the cause. Phoenix Engineering GmbH, a fiber optics company based in North Rhine-Westphalia (NRW), filed for insolvency amid growing financial distress characterized by unpaid subcontractors and employee wages. According to reports, subcontractors are owed over 2.6 million euros, with one Ems-Land firm alone owed 350,000 euros, including 200,000 euros to a landscaping company. Employees, many from Romania and Greece, have not received wages for months and face issues such as unpaid rent. The Cologne District Court initiated preliminary insolvency proceedings at the end of September with Dr. Jörg Gollnick appointed as interim administrator. He expressed optimism about restructuring possibilities despite challenges linked to rising interest rates, stricter credit policies, and project approval delays impacting liquidity. The company's Greek subsidiary remains unaffected by the insolvency.
Meanwhile, Ringat Präzisionstechnik GmbH, a metal processing firm in Pfullingen, Baden-Württemberg, also filed for insolvency primarily due to a lack of skilled labor. The company's inability to replace retiring experienced staff has critically affected operations, despite stable order volumes. Founded in 1986, Ringat specializes in CNC machining and assembly services and currently employs six permanent and three temporary workers. Insolvency benefits cover their salaries through November. The Tübingen District Court began preliminary proceedings on September 25, 2025. Insolvency administrator Axel Kulas views the steady order volume as a positive sign, focusing on completing existing orders and seeking investors to sustain future operations.
These cases highlight the distinct but severe business challenges faced by German companies in 2025, including labor shortages and financial pressures intensified by interest rates and credit constraints, rather than broader economic decline.