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Audrius Linartas, Director of the Accounting Audit Board Valuation and Insolvency Delphi Day he talked about the 2020 statistics. Of course, no one even doubts that last year was very difficult.
“Looking at the figures, last year was exceptional because you couldn’t expect a growth in the number of bankruptcies, the result was the opposite. The number of bankruptcies has dropped significantly since February. If we look at the annual results, we have doubled the number of bankruptcies compared to 2019. The trend is that the number of registered bankruptcies is very small and that trend is not only in Lithuania, but also worldwide due to quarantine and pandemic , which was caused by the number of bankruptcies that ended during the quarantine, ”says the interviewee. .
Bankruptcies will pour out at the end of the year
When asked if it was possible for the state to help some companies avoid bankruptcy, the specialist assured that many bankruptcies would last until the end of the year.
“There are probably many factors here, one of the most important is the state’s decision to adopt a supposed moratorium. Therefore, the state allowed by law during the quarantine and for three months after it not to perform the functions of the administrators and failure to initiate bankruptcy, allowing bankruptcy to start significantly later, and since the quarantine has not yet ended, such new bankruptcies could be expected in the second half.
And state aid was also an important factor, as most companies, despite their stagnation and currently unprofitable, still retain state support, and commercial banks have also agreed to postpone intensive recovery, monitoring the debt ”, says the interlocutor.
When asked in the program if it is beneficial for companies to prolong these insolvency processes, A. Linart assured that there are many companies that are not viable and not only in Lithuania.
“It just came to our attention then. Some people really benefit, because until they declare their insolvency, they can continue receiving benefits, operating and generating income, on the other hand, those who want to speed up the process and start a business again, due to these restrictions, barriers to initiation do not it adds benefits and they can’t open a clean page. That stagnation and corporate zombies that are not viable, they show some signs of life due to the profit, there are many companies of this type and not only in Lithuania ”, says the interviewee.
“We are likely to see more corporate bankruptcy proceedings early on,” he added.
Unemployment can increase
According to the interviewee, the number of unemployed may increase in the future due to bankruptcies.
“We will not feel it directly, but it is very obvious that it will be seen in terms of, say, an increase in disability for work, because if a company now retains and does not lay off employees, benefits, more companies of this type should grow when become insolvent. “
We remind you that the Chairman of the Board of Directors of the Bank of Lithuania (LB) Vitas Vasiliauskas also predicted at the end of January that corporate bankruptcies may increase this year and next. According to him, the number of bankruptcies is constant in “normal” times, but last year it decreased.
According to V. Vasiliauskas, it can be concluded that the number of bankruptcies will increase, “especially when state aid expires”.
Data analytics firm Scorify, which released its 2020 business survey in January, noted that the decline in high-risk companies was linked to government support, including the possibility of tax deferrals.
Therefore, according to the head of the company Žilvinas Mileris, as long as the State provides support, the image of the business will be distorted, and considering the phenomenon of bankruptcies that almost disappeared last year, some companies will continue to coexist only with the State. help.
In Lithuania, the second quarantine due to the coronavirus pandemic was announced on November 7 last year, its regime tightened starting in mid-December, and at the end of January quarantine and circulation restrictions were extended until early March.
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