Coface: Financial losses caused by insolvency reach historical level in Romania

The losses of Romanian companies caused by insolvency have reached a maximum historical level, although 2017 has started with a low number of insolvencies, according to a study released yesterday by Coface. Romania opened over 1,750 new procedures of insolvencies in the first quarter of this year, down 22% year-on-year. Despite the decrease, the financial losses caused by insolvency greatly increased during this period. The losses have been estimated as the total debts of the companies going into insolvency minus the value of their assets. The dynamics is due to the insolvency of several very large companies. They were active into sectors such as the production and supply of electricity, construction, and textile manufacturing. Textile manufacturing was the sector with the highest number of insolvencies compared to the number of active companies in the sector, for the third consecutive year, according to data released by Coface. About 16% of the companies active in this sector went into insolvency every year. However, the highest losses were recorded in the electricity sector, where several big traders were taken by surprise at the beginning of this year when the electricity price suddenly spiked, and had to file for insolvency. The biggest five companies who went insolvent in this sector had total debts of RON 900 million while their fixed assets were only RON 150 million and their equity stood at RON 100 million. editor@romania-insider.com