As the latest analysis by MGBI informs, last month Polish companies submitted a record number of applications to commence restructuring this year. Moreover, the balance of consumer bankruptcies in October also turned out to be the highest since January 2024.
These data correspond with the results of the latest EFL barometer for the fourth quarter of 2024, according to which as many as 60% of small and medium-sized enterprises (SMEs) in Poland expect stagnation for the last three months of the year. This is a noticeable increase compared to the 43% of entrepreneurs who viewed the future of their business with little optimism in the third quarter.
Largest increase this year
In October 2024, the number of applications submitted by Polish enterprises to commence restructuring was 361. Compared to September, when 254 such applications were recorded, this represents an increase of as much as 42%. A detailed analysis of the results for each month this year shows that we have not previously seen such a substantial increase in such applications. So far, their number has risen month by month only three times – in February compared to January by only one application (+0.3%), in May compared to April by 13.5%, and in July compared to June by 12.7%.
“For the first time this year we have such a clear signal of the difficulties faced by domestic entrepreneurs. A fairly high, but not yet record, number of restructuring processes have been initiated. We also observe that more company owners are seeking help in maintaining their businesses in the fourth quarter compared to previous quarters. The reasons? These are usually the month-by-month rising costs of running a business, including the new minimum wage value, social security contributions, and electricity costs. The expected increase in MWh prices for companies next year by about 25% will certainly not improve the condition of the Polish SME sector,” explains Sylwia Szerenos, a qualified restructuring adviser in Continuum Restructuring S.A.
As for the restructurings that began in October, there were 398 of them, which is a rather high result compared to previous months. More restructuring processes were launched only in July (426) and in February (403). In the case of company bankruptcies, the courts declared 34 of them last month, which is not a high annual result and represents a 24% drop compared to September.
Second record ‘peak’
Last month, a record number of decisions to declare consumer bankruptcy were also recorded. There were exactly 1960 of them. September ended with a balance of 1576 consumer bankruptcies, which means that, like in the case of restructuring applications, there is a yet-to-be-seen ‘jump’ this year of almost one quarter. Until now, increases in the number of declared bankruptcies were only noted twice and were of a much smaller scale. In April there were 4.6% more than in March, and in July 4.2% more than in June.
“The downturn in the condition of enterprises, especially those classified as SMEs, often also affects consumers. This is primarily about price increases caused by inflation and the rising cost of doing business. I think we can also attribute such a state of affairs to the lack of wage increases that would offset inflation or even to job cuts by smaller companies in the face of overwhelming costs,” adds Sylwia Szerenos from Continuum Restructuring S.A.
Poorer economic conditions towards the end of the year
The recent edition of the Polish Institute of Economics’ Monthly Business Index (MBI) underscores the previous findings. Its value in November fell by 1.9 points, to 97.7. Decreases in efficiency indicators of companies were recorded in five out of the seven analyzed components, namely sales value, new orders, employment, production capacity, and investments.
Source: https://managerplus.pl/pazdziernik-rekordowy-w-restrukturyzacjach-i-upadlosciach-konsumenckich-50044
