Last year, the weight of large companies under reorganization increased although the number of insolvencies halved.
“The effect of contagion and propagation of negative shocks is much faster at the moment, and the frequency of insolvencies among big companies, with turnovers exceeding EUR1 million, remains rather high,“ said Iancu Guda, Coface Romania services director.
According to Guda, large companies have been playing the role of “commercial banks“ for SMEs, on the backdrop of financing restrictions in the past years, which became a disadvantage for large players.
“The effect of insolvent companies over the economy is different depending on the sector. In the case of Astra insolvency, there are direct consequences on the insurance market, as it affects a large number of individuals and legal entities but also the consumers’ will to close an insurance policy. On the other hand, in the food industry, the impact of an insolvency is reduced as the market is a very competitive one, with many players,“ says Cristian Parvan, general secretary of Romanian Businessmen Association (AOAR).
Parvan added that the impact of a player in the trade sector over the economy is reduced as many of the companies have foreign suppliers.
The largest company that went insolvent and then bankrupt last year was insurer Astra Asigurari, the third largest insurer on the local market by underwritten premiums. The company had 1.8 million clients, 1,400 employees and RON500 million assets.
In the retail sector, the most important insolvency was that of Family Home Concept SRL (former Domo Retail SRL), which had operated electro-IT network Domo by last summer. At the end of last year, the company decided to close all its 75 stores and only keep its online business.
The third large company that went insolvent last year was DIY retailer and construction material distributor Ambient, controlled by businessman Ioan Ciolan, after failing to attract the funds needed to finance its working capital.
Ambient’s turnover fell 20.7% to RON497.7 million in 2014, from RON627.5 million a year before, and the company switched to a loss of RON32.3 million from a profit of RON37.4 million the year before.