The number of insolvent firms in Hungary grew by 13% in the first six months of 2008 compared to the same period of last year, continuing a trend that began in the first quarter of the year. According to a report by Austrian insurer Coface summarized by Gazdasági Rádió the situation is unlikely to improve over the course of the year, with businesses in food processing and steel seen as among the most likely to fail.
Coface thinks the dramatic increase in the number of insolvency procedures which started years ago gives reason to worry, especially when looking at the distribution of the cases.
Among all the business closures in the first half of the year, only a shade more than half (5,601) were winding-ups, slightly fewer (5,009) were liquidations and only 10 were court-monitored bankruptcy reorganizations.
According to Coface, the proportion of bankruptcy proceedings, which aim to resolve insolvency cases and save the underlying business, is much lower in Hungary than in most Western countries, and does not auger well for the local economy.