Getica 95, the largest competitive power supplier and bookstore chain Diverta are two such examples. Both, big names in their sectors, filed for insolvency and are now awaiting the official decision.
Judging by the 2020 revenue, the two are among the ten largest in Romania to go insolvent. Getica ranks first, after its revenue more than doubled to RON1.5 billion, and the net profit stood at RON81.5 million. Diverta is at its second bout of insolvency, the first being caused by the financial crisis more than a decade ago. The closing of the physical stores for several months and the change in consumer spending patterns during the pandemic caused the bookstore chain a 40% decline in revenue and RON10.8 million loss.
The number of companies that went insolvent rose almost 45% in the first four months compared with the year-ago period. There is talk more and more often about a new wave of insolvencies for local companies that survived during the pandemic because the government fed money into the economy. Now, when they have to stand on their own, without any help, the effect of the crisis is showing.
“Speaking of insolvencies, 2013-2014 was the time when the number of cases peaked in Romania, after which it went down and continued to do so. Last year, when the pandemic started, we had an all-time low of insolvency cases, about 6,000,” says Cristina Ienciu-Dragos, head of legal with insolvency firm CITR and country coordinator of INSOL Europe.
What will happen in 2021?
“We hope to see a wave of restructuring, not of insolvencies, but we need to consider that insolvency will be the solution for some companies.”
(English version by Loredana Fratila-Cristescu)