After worst year in history of insolvency of Polish companies, another one comes

In 2020, official sources (Monitor Sądowy i Gospodarczy) published information on 1,293 insolvencies of Polish companies, i.e. 32 percent more than last year and the most in the current decade. Unfortunately, entrepreneurs will have to operate in the conditions of high financial risk for longer – the threat of insolvency of recipients. Euler Hermes forecasts show that in 2021 there will be another significant increase in the number of insolvencies in Poland by + 17 percent, but also in export markets (+ 25 percent).

The market situation is far from a turning point – in the fourth quarter of 2020, there was the highest number of insolvencies in history, 20 percent more than in the previous, third quarter of 2020. More and more companies do not wait for a real void at the cash desk, deciding to restructure and protection from creditors in advance, based on market signals, or solely driven by negative prospects. The risk is not evenly distributed – not only in terms of the industry but also geographically. The voivodeships with a significant share of transport and tourist services from north-west Poland as well as from Świętokrzyskie – with a nearly or over 100 percent increase in the number of insolvencies y/y. There are no safe industries – an example is the food sector, where 109 producers and processors were insolvent (i.e. over 1/3 of all insolvencies of manufacturing companies - 319).

"Such bad results can be explained in many ways, e.g. by pointing to the past in the accumulation of capital reserves, etc., but the closest to the truth is the simplest explanation  – a pandemic and related limitations and difficulties, which can be seen, among others, in the inglorious bankruptcy record in services and transport (not only in goods - this is slowly reviving, but also in passenger). Never in history has there been such a large increase in the number of insolvencies, of 70 percent y/y as in these sectors – which shows how extensive this phenomenon is," Tomasz Starus, member of the management board of Euler Hermes responsible for risk assessment, assesses.

(WBJ)