Staying solvent
In 2007, 447 companies went bankrupt in Poland, a 22-percent drop on 2006, when 576 firms went bankrupt, according to a report released last week by factoring and insurance company Coface Poland. The number of firms going bankrupt in Poland has been continuously falling since 2002, when bankruptcies reached a peak of 1,863. According to Coface, the actual number of companies going bankrupt is somewhat higher than reported, as small companies often close up shop without going through insolvency procedures.
The wholesale sector saw the greatest number of bankruptcies, with 74 wholesale firms going under - 17 percent of all failed companies. Though this number was 38-percent lower than a year ago, the sector has remained the most vulnerable to bankruptcy for several years running.
"This is mainly due to the complicated financial structure of wholesalers, which depends on bank and merchant loans," said Marcin Siwa, the director of the risk-assessment division at Coface Poland.
The construction sector took second place in terms of the number of bankruptcies, with 49 firms folding in 2007. "Companies which were set up during the construction boom have the largest risk of insolvency," Siwa noted. However, this sector is also showing signs of improvement.
As labor costs and prices for construction materials rise, smaller developers can have difficulty financing their investments. According to Coface's experts, eliminating unreliable companies from the market will be good for the industry as a whole, but will negatively influence the industry's image and be painful for people who have invested their savings in the industry.
Geographically speaking, the Mazowieckie (95 firms), Silesia (67) and Lower Silesia (42) voivodships reported the most bankruptcies, as was the case last year. Coface's experts pointed out that development is faster in these regions, meaning the largest number of new firms are established in these voivodships as well. Statistically speaking, it is natural that they also see the most bankruptcies.
