Investment bankers believe the bankruptcy of unprofitablecompanies would be an economic rebound prerequisite, but that forthe time being there have been no high-profile bankruptcies on theRomanian market because neither banks, nor other suppliers areinterested in requesting this procedure.
"Keeping companies alive" increases the likelihood of completemoney recovery. They also say there are cases where banks shouldassume part of the losses and negotiate the takeover of stock incompanies unable to pay their debts.
"(...) Without this stage of bankruptcies we will not havenormal 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 Romaniaconsultancy.
There is a blockage, he added, where everybody is sitting andwaiting for something: banks are waiting for something, firms arewaiting 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," Paunsays.
Investment bankers say suppliers are not interested inrequesting bankruptcies as they would recoup only part of themoney, 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 theraised sums are distributed to creditors in line with a priorityscale," said Madalin Niculeasa, a partner with Nestor NestorDiculescu Kingston Petersen (NNDKP) law firm.
His view is shared by Doru Lionachescu, main partner of CapitalPartners firm. Other consultants, however, say there is also aperception issue, as Romanians are not used to the bankruptcyconcept.
"Banks are still delaying and giving hope things will change,that financing will rebound. I don't know how well-founded thesehopes are, but they exist(...)," Paun states.
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