A record number of companies disappeared in the country

According to nol.hu, the number of discontinued companies has been record-breaking in April. “In a single month, the Court of Registration canceled 4641 companies, so that 17.259 enterprises ceased to exist in the first four months of the year, and the trend is definitely growing” – Tamas Toth, managing director of Opten business information provider company said.

Last year, a monthly average of 3400 companies ceased to exist, compared to this, more than 4000 did it this year. The number of removals published in the first four months increased to 17.259 from 12.648 in the same period last year, which represents a 35% increase. The trend is clearly increasing, so it is almost certain that more than 50 thousand companies will disappear in the Hungarian economy by the end of the year.

“The question is not that whether the trend continues to worsen but how much the economy will miss these discontinuing companies” Tamas Toth said. By analyzing the statistics, the overall picture emerges they won’t be missed so much. In this part of the year, the number of companies, which have been deleted after liquidation, continued to decrease. These are the companies that caused trouble to other operating companies by their debt or by the breach of their contractual obligations. For the rest, the owners decided to liquidate or the authorities forced them to be canceled.

Economically, the termination of the inactive companies is rather an overall positive than negative phenomenon – director of Opten thinks. Although the number of operating firms decreased to 580 thousand from a peak of 604 thousand in one and a half years, the ownership structure is still fragmented in Hungary. – This can cause problems when enterprises, which are low-liquidity, undertake works at a depressed price or by getting significant advances. It also poses a risk for the customer – Tamas Toth said.

The tightening of the government and the decisive action of the Court brings spectacular results. The number of newly registered companies has been fluctuating between 2100 and 2500 since last October, while in the early 2010s, more than 4000 new companies often appeared in the system in one month. These companies were founded by those who already led one or more companies into liquidation, so it was suspected the new companies weren’t conceived as profitable enterprises in the long run. This kind of company fluctuation significantly decreased lately, which is a definitely good development, but the rate of newly founded companies is still high – director of Opten told nol.hu.

The company fluctuation index of Opten (Opten-CFI) compares the number of canceled and established firms in the given period to the number of the operating ones in the beginning of that period. The national index was 16.85% in April. At county level, the April Opten-CFI measured the lowest values in Bacs-Kiskun and Jasz-Nagykun-Szolnok Counties, while the fluctuation was the highest in Budapest, Szabolcs and Borsod Counties.

based on the article of nol.hu
translated by BA

Source: http://nol.hu