Covid Crisis Prospects: Bankruptcies in Bulgaria Up by 21% in 2021

Next year, economic analysts expect growth of company bankruptcies rate in Bulgaria by 21 percent compared with 2019.

The crisis impact on companies and the increase in bankruptcies will be similar to the 2009 insolvencies surge, the difference is that Covid-19 affects many more countries.

Long delays in payments or the large number of customers who do not pay on time can lead to the insolvency of companies.

The forecasts are for a 35% increase in corporate insolvency globally and a domino effect after the pandemic, predict legal experts specializing in intercompany indebtedness.

The risk of bankruptcy threatens almost all sectors, especially transport, automobile manufacturing, tourism and luxury goods. Only pharmaceutical and IT sector, where there is greater stability, are exceptions.

The analyses show that if in 2019 companies had to wait for 60 days on average to receive payment after  a realized deal, then in 2020 the term is expected to reach 66 days, and in 2021  - up to 68 days. This is the period when working capital is effectively blocked, which prevents the business from allocating more resources for investment, modernization and development of new products.

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