From boom to bust: insolvencies spread

Insolvency has shot up in 2010, both in terms of the number of companies and the value. Big names such as Boom, Leonardo, Tiago Malls, TCE Logistic, Diverta and Flanco have had to seek solutions to pacify the creditors knocking at their doors. However, it seems that the eye of the storm has passed: next year insolvency practitioners foresee a decrease in the rate of new insolvency proceedings.

Dana Verdes

Construction, real estate, metallurgy, food and textile production and transportation are the areas which saw the most insolvency this year.

City Mall Bucharest, Fortus Iasi, Ultex Tandarei, Boom, Leonardo, Tiago Malls, TCE Logistic, Diverta, Flanco and Blue Air were just a few of the well-known local companies which were faced with insolvency issues. City Mall, for instance, has to pay back a EUR 40 million loan to UniCredit Tiriac Bank, while footwear retailer Leonardo has liabilities of EUR 95 million.

The number of insolvent companies increased dramatically in 2010. In H1 of this year it reached 11,221 firms, a 7.5 percent hike compared to same period in 2009, when there were 10,435 cases of insolvency.

Some 6,255 companies are involved in general insolvency procedures, about 2,235 are going through the simplified version, 14 are undergoing reorganization and 2,717 are heading for bankruptcy.

Nicolae Rusu, senior partner at Casa de InsolventaTransilvania (CTIR), told Business Review that from the firm’s experience most of the companies instigated insolvency proceedings at their own initiative because of the economic crisis.

“Debt accumulation, the reduction or loss of supplier credit, lack of liquidity, failure to obtain new financing and cash flow problems are some of the factors that see companies turn to insolvency,” said Rusu.

Statistics from the National Union of Insolvency Practitioners in Romania show that this year the percentage of companies that have applied to enter insolvency proceedings  of all applications registered by the courts has soared compared to the previous year, from around 10 to 45 percent.

But insiders think the worst may now be over. For next year, market specialists are talking about a decrease in the number of insolvency cases that will come before the courts.

“We believe that insolvency cases will continue next year, but perhaps at lower levels. A comparative analysis of the first half of this year with the same period of 2009 reveals a downward trend in the rate of initiation of new insolvency proceedings. This decrease will continue in 2011,” said Rusu.

On a market in which financing solutions seem to be under lock and key, it remains to be seen what solutions companies will implement in order to keep their day-to-day operations going and the wolf from the door. If you are looking for escort directory in New Zealand with verified photos and cheap prices than realescort is your choice.

 

Insolvency cases in brief 

 

FLANCO INTERNATIONAL Bucharest

Field: appliance retailer

Value of fixed assets: RON 26 mln

No. of employees: 600

Liabilities: RON 307.6 mln

Procedure status: reorganization

 

ULTEX Tandarei

Field: oil and refined fats producer

Value of fixed assets: RON 88,3 mln

No. of employees: 168

Liabilities: RON 98,1 mln

Procedure status: observation

 

Clasmotor Oradea

Field: official Toyota dealer in Oradea

Value of fixed assets: RON 10,2 mln

No. of employees: 25

Liabilities: RON 15.1 mln

Procedure status: confirmed plan

 

Construct MOD Oradea

Field: road construction works

Value of fixed assets: RON 29 mln

No. of employees: 352

Liabilities: RON 71.3 mln

Procedure status: observation

 

STANDARD SNACKS Bucuresti

Field: pastry products producer

Value of fixed assets: RON 21,2 mln

No. of employees: 65

Liabilities: RON 63,3 mln

Procedure status: observation

 

Romval Cluj-Napoca

Field: metallic construction,

manufacturing

Value of fixed assets: RON 13.4 mln

No. of employees: 150

Liabilities: RON 31.5 mln

Procedure status: observation; the company plans to present a reorganization plan to pay all debts in the next

3 years

 

Telezimex Cluj-Napoca

Field: telecommunication component seller

Value of fixed assets: RON 7.6 mln

No. of employees: 30

Liabilities: RON 6.95 mln

Procedure status: observation; there has been new negotiations with retailers such as Kaufland, Dedeman and Sel Gros, new contracts with suppliers Sony and Phillips have been inked

 

DIRECT Pitesti

Field: construction materials retailer

Value of fixed assets: RON 116.1 mln

No. of employees: 214

Liabilities: RON 85.3 mln

Procedure status: reorganization

 

Leonardo Oradea    

Field:  shoes and leather goods shops

Value of fixed assets: RON 95 mln

No. of employees: 1,692

Liabilities: RON 412,9 mln

Procedure status: confirmed plan

 

CARTESIAN INVEST Floresti

Field: real estate development

Value of fixed assets: RON 34,4 mln

No. of employees: 5

Liabilities: RON 25,9 mln

Procedure status: reorganization

plan approved by creditors

 

MEXXEM Cluj-Napoca

Field: leather products seller

(Stone Creek store chain)

Value of fixed assets: RON 3,7 mln

No. of employees: 199

Liabilities: RON 39,3 mln

Procedure status: observation

 

DTH TELEVISION GRUP Bucuresti

Field: satellite telecommunication

Value of fixed assets: RON 79,2 mln

No. of employees: 341

Liabilities: RON 407,7 mln

Procedure status: observation

 

MLS PROIECT ORADEA (TIAGO MALL)

Field: real estate development

Value of fixed assets: RON 245,4 mln

No. of employees: 0

Liabilities: RON 325,5 mln

Procedure status: bankruptcy

 

PRO EXPRESS RETAIL (DIVERTA)

Field: bookseller

Value of fixed assets: RON 25,5 mln

No. of employees: 556

Liabilities: RON 85,3 mln

Procedure status: observation

 

RED PROJECT THREE Braila (ARMONIA MALL)

Field: real estate development

Value of fixed assets: RON 82 mln

No. of employees: 0

Liabilities: –

Procedure status: observation

 

MEVA Drobeta Turnu Severin

Field: wagon construction

Value of fixed assets: RON 35.9 mln

(accounting value)

No. of employees: 515

Liabilities:  –

Procedure status: observation

 

Source: Casa de Insolventa Transilvania