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Tuesday, June 18, 2024

Fewer companies announced bankruptcy in the construction industry in 2023 than last year. The number of restructuring proceedings has increased. A construction worker tries to survive

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The construction industry ended last year with an increase in the number of restructuring proceedings by as much as 170%. However, the number of announced bankruptcies decreased. The largest part of companies that ended their operations in 2023 were those with the longest market experience, exceeding 20 years.

52 companies from the construction industry announced bankruptcy in 2023, 10 fewer than in 2022. The number of restructuring proceedings opened was 597. This means an increase of 170%. compared to 2022, when 222 of them were recorded and by 250%. compared to 2021, in which 170 of them were opened – according to the data presented in the MGBI report “Restructuring and bankruptcy proceedings in the construction industry. Report 2024”.

Bankruptcy proceedings of construction companies

Companies most often chose this form of saving themselves from bankruptcy performing construction works related to the construction of buildings, performing electrical installations Whether water and sewage, thermal, gas and air conditioning. Many restructuring proceedings also concerned entities dealing with finishing works – stated in the report.

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– The latest MGBI analysis confirms that the construction situation in Poland is still quite difficulthowever, there are good forecasts for the future – said Sylwia Szerenos from Continuum Restrukturyzacje, quoted in the report.

She pointed out that these results may be slightly underestimated for two reasons. – The number of announced bankruptcies may be lower due to the low efficiency of courts related to the large number of proceedings awaiting resolution. Moreover, many companies do not have the funds to finance expensive bankruptcy proceedings, she said.

The expert assessed the increase in the number of proceedings as a good prognosis. – However, it is encouraging that the construction sector increasingly seems to notice a chance to save its business and survive difficult periods through restructuring proceedings. – she added.

As indicated in the report, restructuring was used by enterprises operating on the market for 5 to 10 years – 38 percent. overall, although a large part – almost a quarter – were the youngest companies, with market experience not exceeding 5 years

Fewer bankruptcies

The largest number of bankruptcies occurred among companies carrying out activities specified in two PKD classifications – 41.10.Z and 41.20.Z. This is about enterprises preparing projects or carrying out construction works related to the construction of residential and non-residential buildings. A total of 31 companies from these groups announced bankruptcy in 2023, the report said.

For comparison, among entities performing electrical installations There were four bankruptcies – the same number as among others companies specializing in works related to the construction of roads and highways. Two companies went bankrupt last year performing water and sewage, heating, gas and air conditioning installations. Two companies also disappeared from the map of the construction business carrying out works related to the construction of other civil and water engineering facilitiesj.

– In all categories except construction of buildings, there were no more than 4 total bankruptcies, which shows a huge disproportion in relation to companies operating in this area. However, this is hardly surprising, considering the scale and costs associated with running this type of enterprise. Investments in new facilities, both residential, office and industrial, usually involve huge funds, and in this day and age unpredictable fluctuations in the characteristics of raw materials, systematically rising labor costs and a difficult geopolitical situation finalizing many projects turns out to be very difficult or even impossible – said Michał Grzechowiak from MGBI.

The largest part of companies that ended their operations in 2023 were those with the longest market experience, exceeding 20 years. That's nearly 27 percent. total number of failing construction companies. Those present on the market for 5 to 10 years accounted for 22%. bankrupt companies, and those with 10 to 15 years of experience – 21 percent

As the authors of the report noted, more entities with a short history, i.e. those less than 5 years old, went bankrupt than in previous years. In 2023, they accounted for 12%. general. A year ago, their percentage was 8%, and in 2022 it will be 4%.

The average existence of a construction company declaring bankruptcy in 2023 decreased to 14.6 years, and a year earlier it was 15.8 years.

Main photo source: Shutterstock

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