In the first half of the year, 5,524 new insolvency cases were registered, from 12,862 in the same period last year.
By business sectors, the textile industry and construction sector were the most affected by insolvency procedures, followed by the hospitality industry, the metallurgical industry and wholesale and distribution.
However, Coface notes, the sharp drop in insolvency numbers is only relevant statistically as the insolvency rate in Romania is four times higher than in the region and of 329 cases of the 5,524 registered in January-June were large companies, with turnover of more than EUR1 million.
“Although the number of newly initiated insolvencies in the first half of the current year halved, the financial impact generated within the economy (estimated based on the value of debts not covered by assets) is 163% higher, and the social impact (estimated by the number of jobs that might be lost) is 9% higher,” the report notes.
Coface lists defective working capital, low quality of revenues, insufficient return for the cost of contracted debt, inefficient investments and bad loan/investment ratios as the top five critical mistakes in investment and cash flow management that lead to insolvencies.
“The record drop in insolvency numbers remains relevant only statistically and is not connected to the evolution of payment behavior among private companies, which has deteriorated. The value of payment instruments not covered increased by 62% in the first half of the year, while their mean value stood at RON132,000, almost ten times higher than the level registered before the crisis, of RON14,000 in 2008,” said Iancu Guda, services director and senior economist at Coface Romania.