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December 1, 2021

Local businesses – once successful, now insolvent

Many Romanian-controlled retail businesses went through big problems in 2009, caused by the economic downturn. The latest announcement concerning the insolvency of a retail chain was made recently by the PIC store network, controlled by the brothers Ilie and Cornel Penescu. “The biggest debts are to suppliers. PIC made this decision because of a declining demand on the local market, which took its sales down 30 pc this year, but also because of pressure put by creditors,” said Claudia Rusu, marketing manager of the PIC company. Out of the five stores run by PIC, shareholders decided to close three: those in Braila, Oradea and Calarasi.

In a different move, several companies, including Tnuva and Quadrant Amroq Beverages – the Pepsi bottler for Romania – recently sought the insolvency of Ivet Comprod firm, which ran the Ethos store chain, but Ivet owner Ion Soloman transferred the stores to another company he controls. On the other hand, Ivet Logistic too was the target of an insolvency request by M.G.F. Grup, early in September this year.

The first local chain of supermarkets which became insolvent was Spar, a franchise operated in Romania by the brothers Ioan and Floare Cuc. Trident, controlled by Constantin Mateescu, is another company forced to go insolvent in the second half of 2009. After it already closed two units this year, the Trident chain was left with two hypermarkets – in Deva and Sfantu Gheorghe – and two supermarkets – in Sibiu and Medias. Another store chain, Primavara, owned by Ion Avram, had to stop, this summer, the activity of its unit located inside Euromall, Pitesti.

K Tech Ultra Pro, Romania’s biggest IT&C retailer two years ago, now lost all chances to resume operations and will go bankrupt this month, according to officials from BDO Business Restructuring – the company’s legal administrator. The largest local footwear retailer, Leonardo, controlled by businessman Florin Panea from Oradea, entered judicial reorganization upon creditors’ request, despite closing 40 loss-making shops and firing 600 people.

Insolvency cases, up 40 pc in 2009

The number of new insolvency cases in 2009 topped 19,165 at end-November, with prospects to exceed 20,000 by the end of the year, the National Union of Insolvency Practitioners (UNPIR) estimates. “Compared to 2008, when some 14,500 new cases were opened, this year the number of new files will grow by 37-40 pc. It is obvious that the Romanian economy was caught <> by the economic crisis and the companies without enough resources were unable to resist,” UNPIR president, lawyer Arin Octav Stanescu told Nine O’Clock. Figures released by the National Trade Register Office (ONRC) show the highest incidence of corporate insolvency was reported in the commerce sector, closely followed by processing and construction industries.

“(…) One of the most important measures the state might take, without very high cost, would be to set up a guaranteeing fund that would avail of some EUR 2.5 M, which would provide guarantees to self-sustainable companies, in accord with the provisions concerning state aid (instead of providing state guarantees up to almost EUR 1 bn to a few large companies),” the UNPIR official added. According to the same source, out of the 30,000 cases (new and old) that reached courts at the end of June, only 445 ended in reorganization. Furthermore, UNPIR data put total claims to be paid by companies at about RON 11 bn at end-June, out of which RON 1.4 bn had been recouped last year and in H1 of 2009.

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