OREANDA-NEWSThe downward trend in corporate bankruptcies in Russia has ceased, the Center for Macroeconomic Analysis and Short-term Forecasting has reported. At the end of 2018, the number of bankruptcies was close to the “natural rate”, but now growth has resumed. The number of companies declared bankrupt increased by 2.4% in the first quarter compared to the same period last year. Compared to the previous quarter, growth was 1.9%. The total number of bankruptcies in the first quarter is 9.9% higher than in the same period of the pre-crisis 2014.

The systematic increase in the number of bankruptcies reflects the stagnation of the economy and the non-payment crisis, notes Yulia Litovtseva, head of the practice of bankruptcy and anti-crisis business protection, Pepeliaev Group partner. Banks, experiencing liquidity problems, are increasingly using bankruptcy to return funds to defaulters. “Banks are less inclined to go towards business and restructure debt. Sometimes after the first delay, under certain circumstances, banks can initiate bankruptcy of the borrower”, notes Litovtseva.

Another reason for the growth is the delayed effect of stripping the banking sector, said Sergey Lisin, a partner of BGP Litigation. After each reorganization or revocation of a license, he says, 50–100 new corporate bankruptcies occur.

Despite the formal improvement of the financial condition of Russian companies, the gap between sectors in terms of profitability and debt load is growing. Russian bankrupt companies returned to creditors less than 2% of the sums included in the registries of claims - 22.1 billion of 1.1 trillion rubles, according to Fedresurs. Over the same period last year, a little more than 2% of the debt was repaid - 22.3 billion of 1 trillion rubles.