Business Failures: The 37,700-Bankruptcy Mark Reached at Midyear
With 17,486 proceedings initiated in the second quarter, business bankruptcies rose another 5.4% year-over-year, according to the quarterly study by Altares published on July 16. The vast majority of these difficulties are concentrated among very small businesses and start-ups, which, paradoxically, limits the social fallout.
One figure sums up the quarter: 11,591. That is the number of direct court-ordered liquidations handed down between April and June—more than two-thirds of all rulings. When a company appears before the commercial court today, it is usually already doomed. The 349 safeguard proceedings—which are supposed to intervene before financial difficulties arise—now account for only 2% of all rulings, down from more than 3% in 2023.
A total of 17,486 business failures were recorded in the second quarter of 2026, up 5.4% year-over-year, according to preliminary data compiled by Altares as of July 1. Since January, 37,700 companies have gone out of business, 1,500 more than in the first half of 2025. The pace has been slowing for several months, but the volume remains about 40% higher than pre-COVID levels, when quarterly bankruptcies did not exceed 13,000. The only silver lining is that the impact on employment is declining: 58,830 jobs are at risk, down 9.5% year-over-year, a far cry from the 69,500 jobs lost in the second quarter of 2024.
Micro-businesses and startups on the front lines
The explanation for this paradox lies in the size of the failing companies. Businesses with fewer than three employees account for 75% of insolvency proceedings, with 13,185 cases—an 8.3% increase year-over-year. These persistent cash flow issues are not seen among larger firms: companies with 3 to 19 employees saw their insolvency cases decline by 3.3%, to 3,769 proceedings. Among companies with at least 20 employees (532 proceedings, +2.9%), direct liquidations actually fell by 12.2%, in favor of reorganizations and safeguard proceedings, suggesting that more businesses will continue operations.
Age matters just as much as size. Companies less than three years old have seen their insolvency filings jump by 12.7%, to 2,248 cases, more than three-quarters of which result in immediate liquidation. Contrary to popular belief, 93% of these young businesses are not micro-entrepreneurs but commercial companies, often operating in the restaurant, retail, and auto repair sectors.
Real estate development and the automotive sector: the two problem areas
By sector, construction shows deceptive stability (4,148 bankruptcies, -0.8%). Structural work is holding up (-12.4%), driven by masonry and single-family homes, and finishing work follows (-5.5%). But real estate development is skyrocketing: 276 bankruptcies, up 87.8%, driven by a surge in legal deficiencies in development projects (+180%), more than half of which involve construction-and-sales companies owned by the HPL Group.
The public works sector is also declining (+8.8%). In the retail sector (3,466 bankruptcies, +1.9%), the automotive industry is facing the most difficulties, with bankruptcies up 11% in car sales and 28% in maintenance and repair. Bookstores are booming (+58%), while the sports and leisure sector is deteriorating (+17%); meanwhile, the apparel sector (-14%) and home goods (-6%) are rebounding. The services sector is faltering, and the agricultural sector remains under pressure, while Auvergne-Rhône-Alpes—the country’s second-largest economic hub—remains in the red even as half of the regions return to the green. The start of the new school year will reveal whether the current slowdown is set to continue or if the third quarter will follow the same pattern.
