Only two out of ten companies in Romania have a low risk of entry into insolvency and only 5 percent of companies falling into insolvency want to reorganize itself and have a plan, according to consultancy firm Coface, profit.ro informs. Only half of them succeed in this.
40,000 firms generating 80 percent of the turnover of all companies in Romania were analyzed.
“The share of firms that manage to get out of insolvency is 10 times higher in other European countries. There we see a more constructive intention to reorganize itself,” Iancu Guda, Services Director – Business Information & Debt Collection, Coface Romania explains.
He says that in the absence of an intention to reorganize, many companies opt for dissolution, a much easier process than insolvency.
The wrong investments and high debt level are the main causes for the companies in Romania in terms of entering insolvency.
Guda says that six out of ten companies with insolvency risk fund their long-term investments with suppliers’ money, a situation which puts pressure on the liquidity. On the other hand, a low-risk company finances its investments from remaining profits. Most of them are SMEs, Coface representative points out.