Record increase in bankruptcy in Poland in 2024: Analysis of Causes and Effects

The year 2024 brought a dramatic increase in the number of bankruptcies in Poland. According to the MGBI business interview data, 436 companies were declared bankrupt in the past year, an increase of 10.7% compared to 2023, erstwhile 394 companies collapsed. The most affected sectors were industrial processing, wholesale and retail trade and construction.

Analysis of sectors most affected by bankruptcy

Industrial processing recorded 106 bankruptcys, in wholesale and retail trade 94, and in construction 61. At the same time, the number of restructuring proceedings reached evidence levels of 4,457, an increase of 7.4% compared to 2023. Most restructurings were recorded in trade (941), construction (688) and industrial processing (646).

Causes of the increase in company bankruptcy in Poland

Experts point to respective key factors affecting the increase in bankruptcy:

1. Decrease in the profitability of companies: The advanced cost of production, including energy, is simply a crucial burden on companies, leading to a decline in their profitability. Low sales prices due to low request and large stocks further reduce profit margins. LEGA ARTIS
2. Decrease in turnover: Under conditions of decreasing demand, companies have difficulty selling their products, which leads to a simplification in revenues. The decline in turnover is peculiarly severe for tiny and medium-sized enterprises that do not have large financial reserves. LEGA ARTIS
3. High energy and production costs: Despite the slowdown in inflation, energy and production prices stay high. The advanced operating costs are a crucial burden on companies, especially those operating in energy-intensive sectors. LEGA ARTIS
4. Problems in key economical sectors: Sectors specified as construction and transport face many challenges, including expanding material costs, liquidity problems and a fall in procurement. Coface

Regional diversification of company bankruptcy

Regional analysis shows that the most bankruptcy was recorded in Mazowieckie Voivodeship (600), Silesia (424) and Wielkopolska (311). The Opolskie state is characterised by the lowest number of bankruptcies (57).

Future projections

According to Allianz Trade, in 2024 the number of cases of insolvency in Poland will be 4,700, a 5% increase compared to the erstwhile year. This forecast is peculiarly alarming, as it means continuing the negative trend that has persisted for 5 years.

Recommendations for entrepreneurs

Given the increasing number of bankruptcys, entrepreneurs should focus on:

• Optimising operating costs: Analysis and simplification of unnecessary expenditure can aid to improve profitability.
• Diversification of gross sources: Searching for fresh outlets and products can increase the company's financial stability.
• Monitoring of liquidity: Regular financial checks let faster consequence to possible problems.
• Use of available restructuring tools: The usage of restructuring proceedings can aid avoid bankruptcy.

These actions may aid to increase the resilience of companies to hard marketplace conditions and improve their financial situation.