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May 11, 2021

Only 5 pc of firms declared insolvent avoid bankruptcy

Chances of recovery for firms which become insolvent are very slim, and, in 95 per cent of cases, the companies end up bankrupt, as some of them resort, too late, to this procedure, while others cannot accede to sources of funding to help them out of difficulty, according to insolvency practitioners. “In order to endure, a company has to decide to declare insolvent at the right time, that is to say, without delaying matters for months, while defaulting on their debts, and, at the same time, it needs to find funding,” Arin Stanescu, the chair of the National Union of Insolvency Practitioners (UNPIR), stated, yesterday, during a specialized seminar, quoted by Mediafax. He argued that the success rate in emerging out of insolvency rose in the past two years, as companies came to realize the advantages the procedure offers, and estimated the trend may continue given the modification of insolvency-related legislation, offering better protection to financial institutions bailing out defaulting companies. Stanescu estimated, also, the number of companies declared insolvent would drop, thanks to economic recovery. On the other hand, he stated that, in the first ten months of 2010, the number of insolvencies amounted to 17,000 cases, which is fairly consistent with figures reported for the same interval of 2009.

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