CONTRACTORS: New important insolvencies on the Romanian construction sector

The decrease of 9.4% reported in the Romanian construction sector in the first six months in 2014, the lack of major projects or an investment plan, the delays in recovering the debts from the Government for the works completed, and the negative influence of other factors more or less subjective, relating to political and social environment, led to the insolvency of famous entrepreneurs in Romania this summer, with a particular resonance among the names being TMUCB and Vectra Service. A similar fate could also have Tehnologica Radion and Teloxim Con, after their manager, Theodor Berna, was arrested for 30 days on suspicion of creating a loss exceeding 100 million euro by tax evasion and money laundering. There should be recalled that a year ago other big construction companies joined the insolvency, as Romstrade and the Austrian group Alpine (including the Romanian subsidiary). The lack of construction works that should be carried out during spring - autumn season, which would be able to support the activities in winter -, generates huge problems to contractors, which remain without the necessary resources to overcome the winter months. This reality, doubled by the maintainance of a high level of debt owed by the Government for the completed works, and by the large periods of time the payments are made, generate many difficulties to companies, which aren't able to honor their financial obligations and fall into default. "In 2012 the average term of debt recovery was of nine months. This has led many economically healthy companies to fall into financial imbalances and to face insolvency proceedings. Unfortunately, insolvencies in the sector - which have among the causes the delayed payments made by authorities - make economic and social price to be paid, in the end, by companies, shareholders and employees, when in fact, the fault belongs to other economic entities", said Laurenţiu Plosceanu, president of the Romanian Association of Construction Contractors (ARACO).