In 2022, more than 6,700 companies became bankrupt, which is 10% more than in 2021 (6,144). Of these, 67 are impact companies with more than 5,500 employees, registered assets of more than 1.5 billion lei and debts to the state budget of more than 170 million lei, CITR analysis shows.

The number of influential companies in bankruptcy remains at 67, which is about 1% of the total number of those at risk of insolvency, the same percentage recorded in 2021.

“Despite the attempts of European regulation to encourage fast and efficient restructuring mechanisms, we observe the persistence of inertia towards companies in a difficult situation. Although in Romania we have two new restructuring mechanisms introduced in time into our legislation, we notice that only 1% of influential companies that could benefit from restructuring have been protected by bankruptcy law, most of which were procedures at the request of creditors, not of their own free will,” said Paul Dieter Cirlenaru, CEO of CITR.

A study of influential companies published by CITR at the end of 2022 shows that 43% of companies are delaying the decision to take recovery measures for more than 3 years, resulting in a disproportionate increase in debt to support operations. However, delay reduces the chances of recovery. Last year saw an increase in the number of restructuring procedures in the pre-bankruptcy or non-bankruptcy sector due to the application of tax benefits available to companies.

This market trend indicates that entrepreneurs were looking for specific measures to reduce debt.

“The current figures are the result of fiscal measures implemented over the last period in response to economic difficulties, and are reflected in the increase in the level of global debt in all segments – public, private and household. Only a reversal of this trend will lead to measures being taken to proactively address the difficulties faced by companies. And the effect will be visible on the health of companies and our economy.” concluded Paul-Dieter Cîrlănaru.

After two years of declining global bankruptcies, the latest data confirm that they are intensifying in the global economy, given the gradual end of temporary support measures by governments, which in most cases only delayed the moment of bankruptcy. The later the access to rescue and restructuring solutions, the smaller the chances of recovery.

Historically speaking, significant waves of insolvencies have come several years after hard times in the economy. For example, after the 2008 crisis, the peak of insolvency occurred in 2013-2015. What’s different now is that we now have new restructuring mechanisms that can streamline or help struggling companies recover much more easily. The business environment can benefit from clear, effective procedures, namely a restructuring agreement and a preventive arrangement, where they have the freedom to negotiate with creditors and a stay of enforcement, and at the same time the company’s creditors can benefit from a higher degree of recovery of receivables by resorting to these restructuring mechanisms at the first sign of difficulties.