CITR: Number of distressed impact companies at highest level since 2013

The number of impact companies in imminent insolvency increased to the highest level recorded in the last 11 years and reached 6,949 in 2022, significantly ahead of the 6,463 companies in difficulty registered at the end of the previous year, according to a study carried out by the insolvency society and CITR restructuring. An impact company is, according to the cited source, a company with assets greater than one million euros.

The study notes that 83% of the national turnover is generated by 39,970 impact companies. Of these, 43% are currently companies that can be restructured or are in imminent insolvency, according to the study. At the same time, they record no less than 84% of the total debts from the beginning of 2023.

Paul-Dieter Cîrlănaru, CEO of CITR, said yesterday, at the presentation of the study: "Romania has responded with resilience and ambition to the recent challenges, without, however, being ineffective. The ability to pivot becomes all the more important, when the next challenges will require new solutions and even in some cases the reinvention of the business model. After more than 30 years, Romania's economy can and must begin to learn from its own experience, to observe the cyclicality of some processes and the specifics of the crossroads. The study carried out by CITR offers such a perspective, observing both the current moment and how this year fits into a multi-year cycle".

• The number of companies in difficulty increased by 18% compared to 2022

The number of companies in the difficulty area increased by 18% compared to the beginning of 2020, according to CITR.

Ciprian Nacu, Head of Restructuring CITR, states: "This year's study shows us once again the fact that a large part of the impact companies continue to face difficulties in 2023. Especially in the complicated economic context in which we find ourselves, entrepreneurs must be even more attentive to the warning signals that may indicate a difficulty and take measures in time to prevent the difficulties from worsening. The treatment for these cases consists of restructuring solutions, and the effect will be a resettlement of debts on a sustainable scheme, but also a change in the way of doing business, offering the business the premises of efficiency for a healthy evolution. For the business environment, preventing difficulties means a change for the better".

Depending on the number of companies in difficulty, the most affected industries were, at the end of 2022: construction (2,036 companies), real estate transactions (1,254 companies) and trade (684 companies). According to turnover, the most affected fields are: the energy industry (2.96 billion euros), the manufacturing industry (2.42 billion euros) and trade (2.17 billion euros).

As a result of the implementation of the European Directive in the field of prevention and restructuring in the national legislation, Romanian entrepreneurs can benefit from procedures such as the restructuring agreement and the preventive agreement, in which they have the freedom to negotiate with creditors and suspend forced executions, and the companies' creditors can benefit from a greater degree of debt recovery by resorting to these restructuring mechanisms, from the first signs of difficulty, CITR concludes.