Insolvencies in CEE: same same but different?

Yes, in particular in the real estate sector.

No.

No.

No.

Based on statistical data and our personal experience, our answer is No. Following the extreme increase of 152 % in insolvency rates in 2023, a slight decrease of around 5 % has been observed in 2024. However, this decline does not obscure the fact that the insolvency rate remains alarmingly high at approx. 4 %. This means that 4 % of all active companies are facing some form of insolvency issues. The construction industry leads the list, followed by the B2B service industry – excluding public administration and defence, compulsory social security and activities of membership organisations. The automotive industry, particularly companies associated with major automotive firms, ranks third. Projections based on 2023 data indicate that the household services, mixed product trade and transportation subsectors are also considered risky.

No, we have not seen a significant increase in insolvencies since June 2023.

Yes, a slight increase has been recorded. This concerns all sectors.

No.

There has been no material increase in the number of bankruptcies compared to 2023 so far. The increase in the number of restructurings is approx. 5 %. An increase in insolvencies has been observed particularly in the transport, construction and manufacturing sectors.

Yes.

The number of insolvencies has risen sharply and consistently in 2024. The total number of insolvencies has increased by 11.82 % in the first nine months of 2024 (5,110 companies) compared to the same period in 2023 (4,578 companies).

The most heavily impacted sectors are construction, HoReCa and energy production. Moreover, 1,241 of the insolvent companies in 2024 are "impact companies", i.e. companies with assets exceeding EUR 1m.

The number of companies facing imminent insolvency has also grown – rising by 18 % in 2024 compared to 2023.

No.

Yes. Judicial statistics, indicate a notable recent increase in insolvencies resulting in company dissolution in Slovenia. Specifically, the number of opened insolvency proceedings rose by 6.9% between June 2023 and September 2024 compared to the period between June 2022 and September 2023. Additionally, judicial statistics for the period between January to September 2023 compared to the same period in 2024 indicate a 10.4 % increase in insolvencies. The sectors most affected by insolvencies are the motor vehicle industry (20.08 %), construction (19.20 %) and scientific and technical activities (14.69 %), representing the largest shares of bankruptcies recorded between October 2023 and October 2024.

Yes.

Since June 2023, there has been a notable increase in the number of insolvencies in Türkiye, particularly within the construction, retail and services sectors.

Construction: The industry is facing challenges due to overcapacity, high debt levels and limited liquidity.        
Retail: There has been a decline in consumer spending and an increase in import costs.
Services: The sector is affected by an economic slowdown and high financing costs.

 No.

No. [the EU Restructuring Directive was implemented in Bulgaria in August 2023, but there is still no reported case law on that implementing law] 

No.

No.

While restructuring procedures (RPs) offer greater flexibility and provide immediate solutions for companies facing financial difficulties, the recently implemented "rescue procedure" in Hungary needs greater recognition to gain traction. Despite its advantages, it largely remains hidden in the shadows of the Hungarian insolvency market. Carrying out an RP presumes a certain level of awareness and forward planning from distressed companies, but there are no informative campaigns for SMEs to get to know RPs either from the legislator or the courts.
A review of the past two years reveals no significant impact on the restructuring market, largely due to the lack of data on court proceedings and available precedents. Still, it is likely that large companies and corporate groups are more inclined to use RPs compared to SMEs, as they have better access to legal and accounting resources.

No, North Macedonia currently does not have a restructuring regulation in force. Based on publicly available data, there is a draft Insolvency Act that aligns with Directive 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132. However, there is no available information regarding the timeline for the adoption of this act.

No.

No.

The restructuring law has been in force in Poland since 2016 (although not fully implementing the Restructuring Directive). The most significant market impact, however, came  from a special, mostly out-of-court restructuring procedure (in Polish: postęowanie o zatwierdzenie układu) introduced into the legal framework in 2021. This is currently the most common type of restructuring proceeding in Poland.

Yes.

In our experience, restructuring procedures in Romania are not particularly effective. They have increased relative to the total number of insolvency proceedings since 2014, but only account for around 6 %.

After Directive (EU) 2019/1023 on restructuring and insolvency was implemented in Romania in 2022, a positive impact on restructuring proceedings was anticipated. While the number of requests for preventive, pre-insolvency procedures has risen after 2022, the increase in absolute numbers remains small (from a total of 74 in the previous nine years combined to 64 in 2023 and 73 in the first quarter of 2024). Moreover, few requests result in a decision and few decisions are positive.

Thus, while the market has begun to recognise the potential of pre-insolvency restructuring proceedings, the effectiveness of these measures needs to be improved for a tangible impact.

No.

Yes. Slovenia introduced preventive restructuring proceedings in 2014, allowing distressed – but not yet insolvent – companies to negotiate debt restructuring terms with the majority of affected creditors and "cram down" the minority. This proved to be a popular and efficient tool for resolving distressed situations, particularly in workout scenarios that would have otherwise been addressed by out-of-court or purely contract-based restructurings.

Yes.

In Türkiye, the restructuring regulations, such as the Concordat, introduced in 2018, and the implementation of financial restructuring frameworks have had a significant impact on the market. These tools have been widely employed by businesses, particularly in the construction and retail sectors, to restructure debts and avoid bankruptcy. Initially, the Concordat was considered an effective tool for managing financial distress. However, in practice, companies rarely recover after declaring a Concordat, and it often only delays inevitable bankruptcy. Banks have also employed these measures to manage an increase in non-performing loans. While these measures have provided crucial support, there are still challenges to overcome, such as implementation delays and limited creditor cooperation.

Stabilization of interest rates and inflation.

Creditors may consider changing the debtor's COMI and utilising more efficient insolvency and restructuring mechanisms in the EU to improve their standing.

A proactive approach by creditors prior to and during the court procedure.

Timely filing of insolvency petitions by debtors and a less creative approach to insolvency law.

A stronger and more stable economy would provide businesses with a more predictable environment, reducing the likelihood of insolvency. To this end, a robust and resilient Hungarian banking sector could offer the necessary financial support to businesses in distress. Attracting foreign investment could also bring in additional capital and expertise, which would help stabilise and grow the economy as well. Lower and more favourable interest rates would make it easier for businesses to obtain restructuring loans. Additionally, the Hungarian government could introduce better policies and incentives to support struggling businesses, including tax breaks, grants or subsidies aimed at helping companies restructure their operations and finances. A more effective legal framework for insolvency and restructuring processes can make these procedures more efficient and less costly. Better access to professional advisory services, such as financial consultants and legal experts, could help businesses develop effective restructuring plans. Lastly, offering education and training programmes for business owners and managers on financial management and restructuring strategies can equip them with the knowledge and skills needed to prevent insolvency – such as recognising when to seek professional advice.

In our opinion, the following measures can improve the insolvency and restructuring landscape in Macedonia: (i) adoption of the draft Insolvency Act; (ii) developing incentives for private investors and funds to participate in distressed asset management; and (iii) raising public awareness and reshaping societal and business perceptions of insolvency and restructuring, highlighting them as opportunities for growth rather than as signs of failure.

i) Return of competence to the courts of appeal (instead of the current first instance courts); ii) possibility to carry out online court meetings; iii) shorter procedural terms for specific steps to be taken during the insolvency process; and iv) consistent improvement in the professional training of judges.

Greater transparency in insolvency proceedings, along with enhanced education and training for key stakeholders such as insolvency administrators and Commercial Court judges.

We are still awaiting the full implementation of the Restructuring Directive, as Polish law has yet to incorporate certain provisions outlined in it.

While some legislative reforms in insolvency law have helped increase the use of insolvency proceedings, the worsening trend of insolvencies indicates that Romania requires substantial reforms to enhance the viability of companies.

The following are key areas for improvement:

1. Increase the predictability and applicability of insolvency rules (and especially pre-insolvency proceedings), making insolvency a more attractive option for companies in economic difficulty. The insolvency legislation should entice companies to opt for insolvency proceedings while they can still restructure, rather than avoid insolvency because of the associated stigma and wind up entering directly into bankruptcy proceedings. The current legislation remains unpredictable, with key terminology – such as "difficult economic situation", which warrants pre-insolvency restructuring proceedings – still vague and unclear. Such ambiguities need to be ironed out.

2. Enhance the viability of proposing and implementing a reorganisation plan by granting creditors a grace period for negotiations and allowing more time for submitting the plan.

3. Perhaps the most important reform does not concern the insolvency rules themselves, but rather Romanian company law as a whole, which makes it more difficult to run a business in Romania. Simplifying procedures, overhauling outdated legislation and implementing more business-friendly tax laws could help prevent insolvency proceedings.

The introduction of legislative measures to enhance the time efficiency of the insolvency procedure.

Reduced complexity of the insolvent reorganisation ("compulsory settlement") proceedings. These appear to be underused due to uncertainties regarding possible outcomes and court interpretation.

To improve the insolvency and restructuring situation in Türkiye, it is important to simplify the legal framework, encourage cooperation between creditors and debtors, and promote early intervention. Providing affordable financing and promoting out-of-court restructuring solutions would also increase efficiency and support distressed companies.