Four out of ten businesses that went insolvent in January-November were in transport, storage, the processing industry and retail, and a total 15,148 businesses went insolvent, slightly fewer than last year.
The average turnover of companies that went insolvent in 2012 was 34% higher than that of companies that went insolvent in 2011.
The year kicked off with a major bankruptcy as Israeli-owned dairy producer Tnuva Romania filed for insolvency after posting massive loss. The company had invested nearly EUR60 million in Romania starting 2005.
Also in January, a court approved insolvency procedures for BRC Business Group, the developer of the Citadella Titan residential complex in Bucharest, with over 200 apartments, financed by Romanian lender BCR. The real estate developer, owned by British, Israeli and Dutch shareholders, was founded in 2006 and had debts of around EUR16.5 million at the end of 2010.
Other insolvencies in January were Staff Collection and Corssa, which operated retail stores House of Art, Fox, Levis and Eponge in Romania.
Businessman Dinu Patriciu had a bleak 2012 as his stores Minimax Discount and Macro filed for insolvency in February. By that time, all the 58 stores in the chain had been closed, just one year and a half since Patriciu had bought them. Minimax had losses of 14.5 million lei (EUR3.5 million) and its debts stood at RON127 million, nearly half of its turnover.
Two weeks later, Patriciu’s Mic.ro Retail also filed for insolvency. The businessman owned 830 Mic.ro stores, all of which were closed.
Construction companies didn’t fare very well this year either. Concefa Sibiu filed for insolvency in February in a bid to reorganize its activity. Its insolvency was approved mid-March. The company’s revenues had dropped 28% in 2011, from RON128.7 million to RON92.5 million, and the company posted a loss of RON35.7 million from a profit of RON3.5 million in 2010.
Lower purchasing power also affected cab companies and one of the largest cab companies in Bucharest, Taxi Mondial, asked for insolvency at the end of February, after posting losses of a few million lei over the past years.
Residential complex Laguna Residence, built by Spain’s GEA Internațional Development, went insolvent in March. The 500-apartment project was supposed to be finished in 2009, but works had been stopped initially because of problems between developers, Spanish groups GEA 21 and Prasa. In summer 2010, the project was taken over by GEA 21, which obtained EUR10.5 million financing from La Caixa and announced it was to finish the first apartment buildings at the end of 2010 or early 2011.
Because of the crisis, wine sales in Romania were also hurt and one of the biggest local producers, Murfatlar Romania, went insolvent.
With debts of over EUR20 million, the Israeli company that owns the Universul Palace in Bucharest, built in the early 1930s, also went insolvent.
Bankruptcy did not spare the IT industry either, but not on account of profitability. In April, the court approved the insolvency of IT distributor RHS Company, with sales of over EUR80 million in 2010 and profit-turning for the past three years, which had its accounts blocked over VAT fraud suspicions. Founded in 1999, RHS Company is one of the largest local IT distributors, with units opened in Holland, Macedonia, Serbia, and Bulgaria. The company, owned by businessman Dragos Alexandru Popescu, was the biggest local importer of Fujitsu, LG Electronics, AMD, Brother, Intel, Canon, HP, Sony, Kingston, Samsung, Toshiba, Microsoft and a provider to retailers Altex, Domo, and hypermarkets.
In May, Can Serv, owner of Primavara supermarkets, went insolvent after posting a loss of RON4.85 million in 2010 from a profit of around RON1.9 million in 2009. The company had debts of RON161 million in 2010 and 385 employees. Part of the Primavara supermarkets were bought in 2010 by Mega Image, part of Belgian group Delhaize.
The biggest and most resounding insolvency of the year was state-owned hydropower generator Hidroelectrica, which entered insolvency on June 20, citing low-price energy sales, extensive drought and defective management. The company lost EUR1.1 billion in 2006-2012 because of underpriced bilateral deals.
Hidroelectrica’s net profit dropped 45 times last year, from RON292.3 million to just RON6.4 million, while total revenues decreased from RON3.41 billion to RON3.18 billion and expenses rose from RON3.02 billion to RON3.14 billion.
The number of Romanian businesses that went insolvent in January-November declined 1.7% compared to the same period last year, according to Trade Registry data. During the same period, 119,000 new businesses were founded, from 124,500 in 2011. Over one million businesses were active in Romania at the end of November.