Palóc Kft.’s bankruptcy

When a few weeks ago CBA’s bastion in North East Hungary, Palóc Kft. went bankrupt, most people in the trade blamed the government, saying this was the result of their over-regulating the market. As we all know, on 1 January 2016 a new law entered into force, with the goal of creating better conditions for smaller market players against multinational FMCG retail chains. According to the new law, no retailer is allowed to make loss for more than two consecutive years – if it does, its trading licence is revoked.

Due to the law market changes have already started and it is obvious that there will be winners and losers. As for the case of Palóc Kft., we still don’t know how they ended up with a HUF 1.9-billion deficit. The reasons will be examined during the liquidation process, as suppliers and employers would like to get the money that they are owed and some kind of explanation too. All in all, the goal is still the same: creating a more balanced retail market with, small, medium-sized and large retailers and suppliers, where the profit isn’t realised on one side only.