Total revenue of the almost 30,000 that joined the insolvency ranks last year stood at more than EUR8 billion or 3% of the total revenue of the companies in Romania. This indicator only includes the data about insolvent companies in 2013. The impact on the business sector is even more serious when looking at the number of companies that went insolvent in 2008-2013, more than 130,000.
The total revenue of the insolvent companies is hard to calculate because only half of those in default filed their 2012 financial statements. The 2012 data are the only official figures available about the business of companies in Romania.
The other 15,000 did not file their financial reports in 2012, only in the years before that and almost 6,000 have not filed anything since 2008, according to Trade Registry data sent to ZF. The revenue that ZF calculated, more than 36 billion lei (over EUR8 billion) for the 30,000 companies, is based on their last yearly financial statement.
“We have 300 employees left of the 1,800 two or three years ago at the three insolvent companies of our group,” says Constantin Toma, chairman of the Buzau-based Romet group, a EUR250 million business before the crisis, which is now awaiting approval for its reorganization plan.
“Once you’ve got ‘insolvent’ written all over you, you no longer have any credibility, no access to tenders and big contracts because everybody avoids working with such a company.”
Toma still hopes to save his business and says one of the options its creditors (BCR and UniCredit are its main lenders) considered is the merger of the three companies in the group to create a more competitive entity and go back on the market.
Insolvency specialists’ data show 5% of the companies filing for insolvency successfully reorganize at best, while 95% go bankrupt. News of two more companies folding came at the beginning of this year. One of them was Bata Sky Imobiliare based in Giurgiu (the former Blue Air Transport Aerian) and Pro Expres Retail, the company to which the Diverta stores were registered until last year.
The two had revenue of EUR150 million and EUR12 million and their brands, Blue Air and Diverta, stayed in business but are operated by different companies and by different shareholders in Blue Air’s case.
In other major insolvency cases, such as the hydropower producer Hidroelectrica and footwear retail chain Leonardo, reorganization was done under the same company. The state-run power producer even exited insolvency and expected EUR200 million net profit in 2013.
“Last year was a record year in terms of insolvencies and I’m afraid things will not end here as long as the government keeps raising taxes and borrowing more to drive consumer spending while cutting investment,” says Constantin Toma, who does not believe this is a winning strategy for the business sector.
The real economy does not feel the gross domestic product growth close to 3% that the Ponta Government announces and does not see any solutions for development in the absence of new investment projects.
Last year’s insolvencies reveal the extent of this phenomenon many in the business sector believe to be the main problem of the local economy.
Bucharest and Bihor County (NW Romania) recorded the highest number of insolvencies in 2013, 3,759 (up 5.44% on 2012) and 1,826 (up 39.5%), followed by Galati (SE Romania, up 18%).
Most companies that went insolvent operated in the retail business, 10,436, up from 9,329 in 2012, according to data cited by Mediafax.
The number of new companies established in 2013 stood at 124,816, 0.63% fewer compared with 2012. Most of last year’s new businesses operate in the retail and agriculture, forestry and fishery sectors (36,000 and 22,000 respectively).
(English version by Loredana Fratila-Cristescu)