Bankruptcies in Bulgaria are expected to increase by 2% in both 2025 and 2026, according to experts from Allianz Trade, a global leader in trade credit insurance. While this rate remains below the global average of 6% in 2025 and 3% in 2026, the rise is still significant compared to pre-pandemic levels, which were 7% and 9% lower, respectively.

Analysts warn that the growing trend of delayed payments among Bulgarian companies signals an increasing financial strain, particularly in the construction, agriculture, and transport sectors. While Bulgaria's bankruptcy procedures are lengthy and complex, making the overall number of bankruptcies appear lower, businesses are struggling with extended payment terms and mounting debts.

The transport sector remains the most affected by overdue payments and bad debts, with companies facing difficulties in meeting obligations to fuel suppliers and dealing with high levels of intercompany indebtedness. Payment delays in the sector typically range from 90 to 120 days. In the construction industry, small firms are particularly vulnerable, often failing to repay debts even after a 120-day grace period. Companies involved in public procurement projects report delays in state payments ranging from six to nine months.

Similarly, small agricultural producers are under pressure, struggling to sell their produce or facing financial shortages due to leasing costs and bank loans. Many are forced to postpone debt payments until the next harvest. The food sector, especially the meat industry, has also seen an increase in delayed payments, some stretching between 120 and 180 days. In certain cases, disputed receivables arise due to the delivery of substandard or unsuitable products.

Although the number of bankruptcies in Bulgaria has not yet risen sharply, many businesses are seeking agreements with the National Revenue Agency to reschedule public obligations. A growing trend of ownership changes, such as selling companies or restructuring partnerships, indicates that businesses are taking alternative measures to cope with financial difficulties. Such adjustments, however, often lead to further delays in debt repayment.

Intercompany indebtedness is a key contributor to financial strain, with average payment terms increasing to between 90 and 150 days. Export-oriented Bulgarian companies face additional risks due to rising bankruptcies in key trading partner countries. Global bankruptcies rose by 10% in 2024, with even sharper increases in Germany (23%), France (17%), and Italy (45%). Nearby countries such as Turkey (45%), Greece (17%), and Romania (9%) have also reported significant rises, posing further challenges for Bulgarian exporters.

Allianz Trade experts in Bulgaria are already noting a sharp increase in delayed payments for Bulgarian exports. Some cases involve large sums owed by partners in Germany, Denmark, France, and Italy, with overdue payments lasting between 60 and 120 days. In many instances, repayment plans are being negotiated for terms of six to 18 months. If a Bulgarian company is engaged in a high-value transaction, such delays could pose serious financial risks, potentially leading to insolvency.

With increasing global uncertainty and the potential for trade conflicts, businesses are advised to take precautionary measures, including leveraging trade credit insurance and financial risk assessment tools. According to Allianz Trade’s latest report, the ongoing economic challenges, coupled with persistent inflation and high interest rates, are expected to make business survival even more difficult. The projected rise in global bankruptcies in 2025 could also put 2.3 million jobs at risk, further highlighting the need for companies to prepare for a volatile economic landscape.

Source: Allianz Trade