Another RASDAQ Company Goes Insolvent: Plastic Producer Metaplast - Buzau

Buzau-based plastic producer Metaplast (RASDAQ:METL) has joined the list of companies that have filed for insolvency in order to protect their business, after having incurred severe consequences of the ongoing economic crisis.

"We have filed for insolvency in order to reorganize our operations. We did not want to wait for the majority shareholder to make this decision," Metaplast representatives told BURSA, while expressing confidence that the company would recovery fast.

Metaplast laid off most of its employees early this year, as the ongoing economic crisis and drastically reduced access to financing took a dire toll on the company"s order intake.

Halfway through the year, the company reported overall debts of 9.7 million RON to employees, suppliers and the State.

Metaplast also reported a severe diminution of revenues, as a result of a complete stop of production. Sales of assets and stockpiled products were the only sources of revenue in the reporting period.

• Increasingly more companies voluntarily file for insolvency to protect their business

Although the insolvency procedure has a certain odour of bankruptcy attached to it, its legal significance is that the company in question does not have sufficient liquidities to pay off due debts at one given point in time.

As a matter of fact, increasingly more companies have filed for bankruptcy this year, in order to buy some time to reorganise their crisis-stricken operations.

Approximately 40 of the over 1,600 companies listed on RASDAQ have reported to have reached various stages of the insolvency procedure. Nevertheless, the real number of insolvency cases could be much higher as many companies do not rush to communicate such information to the Bucharest Stock Exchange, which also controls RASDAQ.

Brailact - Braila (RASDAQ:BRLT) is one of the largest companies currently undergoing an insolvency procedure. The dairy factory reported losses of some 10.5 million RON for 2008.

Mecanica Marsa (RASDAQ:MEMI) has also filed for insolvency. The car accessory manufacturer closed last year with losses of 1.1 million RON and a turnover of 22.3 million RON.

Nearly all the companies that are currently undergoing an insolvency procedure closed last year in the red, although the effects of the economic crisis were softer last year than they are now. Companies in this situation also reported significant overdue debts.

According to the National Union of Insolvency Practitioners, the number of insolvency cases in Romania increased by two thirds in the first seven months of the year, compared to the corresponding period of 2008.