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Krediidiinfo: Bankruptcy threat is becoming more and more difficult to spot

10. Mar 2015

Last year, 428 companies in Estonia were declared insolvent, which is 31 enterprises i.e. 6/8% fewer than a year before as the panel survey of bankrupts in Estonia conducted by Krediidiinfo shows. At the same time, the threat of bankruptcy has become more difficult to spot. 

Unlike in the previous years, companies that were better capitalized, held large stocks and rather invested in real estate and equipment in their last year of operation went bankrupt. 

The year preceding the bankruptcy merely displayed marginal changes as far as the companies’ losses and decrease in revenue from sales were concerned. At the same time, the share of companies in long-term tax arrears fell from 75% to 50% of bankrupt companies. 

The share of abatements i.e. bankruptcies of companies that held no assets, which constituted 64.5% of enterprises involved in bankruptcy proceedings last year, remained high (the corresponding indicator constituted 67% in 2013). 

In the last five years, bankruptcy rate has been declining. Last year, 2.2 per thousand or every 455th company went bankrupt last year (while it was every 390th the year before and every 331st in 2012). Krediidiinfo’s analysts do not forecast any drastic changes on the basis of the first two months of 2015 either. 

For several years in a row, the sectors to show the highest bankruptcy rate were accommodation and catering as well as processing industry with 6.30 and 4.54 bankrupts per thousand of enterprises respectively. Among the companies that went bankrupt in 2014 there was one industrial enterprise (Catmet AS), four construction sector companies (Facio Ehituse AS, HR Restauraator OÜ, Sfinks Ehitus OÜ and Balti Betoon OÜ), four wholesale companies (Alberta Trade OÜ, Deleesia OÜ, Flashtrade OÜ and Fercon Trade OÜ) as well as one shipping enterprise, Priva Shipping Company OÜ. 

A typical bankrupt company was a firm with five employees and sales revenue below 0.2 million euros whose equity capital has shrunk to a minimum. Every second company was in increasing or constant tax arrears in the past year. Around 85% of bankrupt companies received low rating (BB, B, C, U) in their last year of active operation. 

Krediidiinfo AS specialises in international credit information gathering, processing and intermediation, focusing on decreasing financial risks of Estonian companies. Krediidiinfo AS has conducted surveys concerning the bankruptcy of Estonian companies since 2000. 

Additional information: 
Alar Jäger, CEO of Krediidiinfo AS