A global economy at a standstill, populations confined and hospitals overcrowded are the consequences of an unprecedented health crisis. A rescue plan is needed and recovery measures are crucial. The health and economic situations have imposed crisis management, leading to supply-chain disruptions. Companies must be saved or face the consequences. Policymakers still remember the great financial crisis pain and this is why emergency measures have been deployed to ensure the continuity of the economy; tax relief is being offered and longer payment terms are granted. But above all, credits are granted. The decision-makers have tried to deploy all possible means to soften the effects of this pandemic by pursuing a soft landing. 

The global economy has been hit hard and when signs of a recovery start to appear, geopolitical turbulence has emerged, and companies are suffering the consequences. All the facilities granted during the crisis must be settled. Banks, the state and suppliers are the main creditors of any company. In addition to bank debt, companies can benefit from supplier debts. The major problem with this type of debt is that it links economic actors who are also linked by the operating cycle. We can therefore assume that the risk of default is twofold. In the event of a bankruptcy, the supplier will lose its receivables and its customer. A chain of bankruptcies can be triggered and a whole sector of activity can collapse. Indeed, depending on the sector of activity, a domino effect can be observed when a major player in the market goes bankrupt. However, this effect is less visible with tax and social security debts. Presumably, the state can provide a welcome boost by granting relief from tax and social security debts. But the insolvency of companies leads to a decrease in tax revenues. Between 2019 and 2020, the tax authorities of the OECD countries have suffered a loss of € 620bn and tax arrears of € 200bn (OECD 2022, Tax Administration 2022). As a result of this decline, a decrease in the levels of state investments and social benefits can be observed. Thus, the consequences will be wider and will affect all economic actors, including households. As a result, consumption, which could play the role of a precursor to an economic recovery, is in hibernation, as the following graph shows: