Investment bankers: There are no bankruptcies as they would generate big losses for banks
Investment bankers believe the bankruptcy of unprofitable companies would be an economic rebound prerequisite, but that for the time being there have been no high-profile bankruptcies on the Romanian market because neither banks, nor other suppliers are interested in requesting this procedure.
"Keeping companies alive" increases the likelihood of complete money recovery. They also say there are cases where banks should assume part of the losses and negotiate the takeover of stock in companies unable to pay their debts.
"(...) Without this stage of bankruptcies we will not have normal economic growth, and I do not mean increases of 0.5-1%. We'll continue to be in a recession or witness stagnation at best," says Matei Paun, managing partner with BAC Investment Romania consultancy.
There is a blockage, he added, where everybody is sitting and waiting for something: banks are waiting for something, firms are waiting for something. "There is a general state of expectancy, hurting the economy. At the moment we see several bankruptcies, we'll have a signal that cash is entering the market," Paun says.
Investment bankers say suppliers are not interested in requesting bankruptcies as they would recoup only part of the money, whereas if the firm continues to operate and "better times" come, troubled companies may return the entire owed sum.
"After a company goes bankrupt, its goods are sold and the raised sums are distributed to creditors in line with a priority scale," said Madalin Niculeasa, a partner with Nestor Nestor Diculescu Kingston Petersen (NNDKP) law firm.
His view is shared by Doru Lionachescu, main partner of Capital Partners firm. Other consultants, however, say there is also a perception issue, as Romanians are not used to the bankruptcy concept.
"Banks are still delaying and giving hope things will change, that financing will rebound. I don't know how well-founded these hopes are, but they exist(...)," Paun states.