September 18 (SeeNews) - The number of insolvencies of Bulgarian companies fell the most, by 35.6% year-on-year to 381, among the countries of Central and Eastern Europe in 2016, French credit insurance agency Coface said.
"Among the 14 CEE countries covered by our analysis, eight recorded a slump in insolvencies last year. The strongest fall, of 35.6%, was experienced in Bulgaria where the pharmaceuticals, IT and education sectors hardly recorded any insolvencies," Coface siad in its Central & Eastern European insolvencies overview report published earlier this month. The report comprises 14 countries in the CEE region.
Nevertheless, indebtedness of Bulgarian companies remained high, Coface noted. Non-performing loans are a concern for Bulgarian banks and for companies suffering from difficulties in collecting receivables from some of their counterparties.
Companies from the trade sector account for nearly a fifth of all cases of insolvencies, followed by construction and real estate firms with 15%. The main reasons for these financial difficulties include high levels of indebtedness, poor liquidity management and fewer funding opportunities.
Last year showed a continued period of improvement for Romanian businesses. Whereas just three years previously there were nearly 28,000 insolvencies in Romania, this figure dropped to 8,053 in 2016. The sizeable contraction of 20.8% in company insolvencies does, however, mask some specifics, Coface said. This significant decrease is recorded against the backdrop of a base effect and the high weight of insolvencies among very small companies.
Nevertheless, 2016 also saw the start of a major decrease in insolvencies among large companies. In a sectorial split, construction and the manufacturing of textile products, clothing and footwear, as well as hotels and restaurants, recorded the highest insolvency rates.
In Croatia, there was a significant increase in insolvency proceedings recorded last year. A new bankruptcy law entered into force in September 2015 which strongly affected the 2016 insolvency figures. Under the new law, the National Financial Agency (FINA) is obliged to start bankruptcy proceedings for any company whose accounts have been blocked for more than 120 days. Since the entry into force of the new law, all the companies with blocked accounts automatically become bankrupt. As a result of ‘cleaning’ registers of these dormant companies, the level of bankruptcies in Croatia surged.
Insolvencies in Serbia also increased, by 13.8% to 5,803 in 2016, but they are expected to start decreasing in 2018, according to Coface projections.
Business insolvencies in Slovenia fell by 10.9% to 647 for the year 2016.
|
Total insolvencies 2015 |
2016/2015 (pct change) |
2017 fcast (pct change) |
2018 fcast (pct change) |
Bulgaria |
381 |
-35.6 |
-4.7 |
-2.8 |
Croatia |
14,495 |
not comparable* |
4.3 |
-0.2 |
Romania |
8,053 |
-20.8 |
-2.7 |
-1.8 |
Serbia |
5,803 |
13.8 |
2.0 |
-0.9 |
Slovenia |
647 |
-10.9 |
-3.6 |
-1.0 |
*Due to law changes 2015/2016 percentage change figures were not comparable
Source: Coface