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September 27, 2020
BUSINESS

Romania, second in insolvencies rates in CEE at active companies

Considering the number of new insolvencies opened during 2013 in CEE countries, Romania has the second highest rate of insolvencies compared to the number of active companies, 6.44 percent, according to a recently Coface CEE Insolvency Report 2013.
The only country with a higher percentage is Serbia, where the percentage of 7.61 percent is explained by a base effect (a reduced number of active companies). Moreover, Romania has registered a total number of 27.145 new opened insolvencies during 2013, which is double than the level recorded in Hungary, although the number of active companies (with turnover different than zero) is 30 percent lower than in Romania. The comparison becomes more eloquent by analysing the figures registered in Romania, in relation to the case of Poland, which registers 300 percent fewer insolvencies (only 818 new insolvency procedures opened in 2013) in terms of active companies, 4 times higher compared to Romania.
“The phenomenon of insolvencies amplified in Romania, especially within the post-crisis period of the last 5 years, generating approximately 40 percent of all insolvencies opened during 2013 in CEE, while registering only 6 percent of the total active companies in the region. This is due to a very permissive legislative framework for the debtor that encourages the insolvency as an effective protection measure against creditors,” explains Constantin Coman, Country Manager, Coface Romania in a press release.
The start to 2014 reads more positive in terms of economic outlook. Coface anticipates that the average growth rate of CEE countries will nearly double, increasing from 1.1 percent in 2013 to 2.0 percent in 2014. The engine of this improvement will continue to be fuelled by the Baltic States with Latvia and Lithuania at the top of the CEE region and forecasted to grow 4.2 percent and 3.4 percent, respectively.
Companies in the CEE region will benefit from the improved situation of their main foreign trading partners. It will take time before companies become less restrained with their business activities and results be seen in their financial results. While Poland and Latvia should notice a decrease in the number of insolvencies this year, other economies will experience a further increment of bankruptcy proceedings. Czech Republic, Hungary, Romania as well as Croatia and Slovenia will record the highest increases for the entire year.

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