The total number of insolvencies of Polish enterprises after three quarters of 2021 amounted to 1,841 cases and is higher by 131% per year, according to the Coface report. In comparison with the result after 6 months of this year. the growth rate decreased from 160% to 131%, but the reason is the increase in last year’s base, as in Q3 2020 new out-of-court proceedings have already appeared in the statistics.
“The total number of insolvencies of Polish enterprises in the nine months of 2021 amounted to 1,841 cases, which is an increase by as much as 131% compared to the corresponding period of 2020. Statistics of corporate insolvencies in Poland are largely ‘powered’ by out-of-court forms of restructuring, i.e. simplified proceedings for approval of an arrangement, the share of which in the total number of provisions in the first three quarters of 2021 reached 66% These proceedings, introduced by the so-called covid act, have gained in popularity since their introduction, i.e. in June 2020 [… ] On the other hand, similarly to most other countries, also in Poland a lower number of court-announced bankruptcies of liquidation companies is recorded.In the first nine months of this year, such decisions were by 27% less than a year earlier and concerned only 286 enterprises, which was the lowest result since 2008,” said the chief economist of Coface in Poland and in the Central European Region, Grzegorz Sielewicz.
The total number was made up of court proceedings and out-of-court notices:
– In the first three quarters of 2021, the courts announced bankruptcy and restructuring decisions of 626 Polish companies (according to data at the end of September 2021), i.e. over 8% less than in the corresponding period of 2020;
– Additionally, 1,215 business entities reported insolvency in the form of a new simplified arrangement approval procedure (without registration in court) in the Court and Economic Monitor. This is almost 1000% more than a year ago (however, the third quarter of 2020 was the first in which this form was available, so the base for comparison is low).
Among the types of court proceedings, liquidation bankruptcies were announced the most – 286. Proceedings for approval of an arrangement were ranked second (178). This is a huge increase compared to the corresponding period of 2020, when there were 16 of them, while the number of rehabilitation proceedings decreased. After Q3 2021, there are 50 of them, while in the same period of 2020 there were 92.
We see an increase in insolvencies in all sectors. The biggest jump was recorded by agriculture (+ 301%) and services (+ 156%) and transport (+ 148%). Most proceedings were announced in services, i.e. 533, which constitutes 29% all cases.
“Smaller entities were definitely dominant in the population of insolvent businesses. It was entrepreneurs, civil partnerships and farmers who most often declared bankruptcy, constituting 60% of all insolvencies. A very high share of bankruptcies in the service sector (29%) resulted directly from months of restrictions and limitations affecting the HoReCa, event and training industries. The situation was still stable among larger entities. Many enterprises could still benefit from state aid, while the Polish economy clearly recovered, exceeding the pre-pandemic GDP already in Q2 2021. The payment discipline of contractors did not deteriorate significantly, therefore insurers continued to record very low loss ratio,” commented Barbara Kamińska director of risk assessment department at Cofaka in Poland.
As she pointed out, the biggest economic challenge for industrial enterprises in Poland at present is the shortage of supply and it is they that inhibit the expansion of many companies.
“Downtime in the automotive industry is a good example here. Soaring prices of raw materials, fuels, energy, transport and rising wages translate into high inflation. Not all companies on the market will be able to transfer this cost increase to their customers. The still unchecked pandemic situation, supply barriers or the possible weakening of domestic demand, together with the withdrawal of aid funds, may result in an increase in payment gridlocks and bankruptcies also among larger players next year,” according to Kamińska.
Source: Coface and ISBnews
