Companies based in Spain are at risk of go falling one after another for the mismanagement of the economic crisis derived from the coronavirus pandemic. The Registry of Forensic Economists (Refor) of the General Council of Economists of Spain provides that our country leads the way in terms of the increase in global insolvencies by 2021. Specifically, bankruptcy proceedings will skyrocket by 41% compared to the world average of 35%, making Spain one of the countries with the highest percentage of insolvencies, according to the Bankruptcy Atlas 2020, which was presented today in a online by economists.
The authors of the study emphasize that Spain will be particularly affected by the crisis because it has a business fabric made up mostly of small companies and belonging to sectors linked to tourism. Thus, the bad debt forecast table will be led by the United States (57% more in the interannual rate), Brazil (45%), China (40%) and Singapore (39%); Y in Europe it is led by Ireland (44%), Portugal (44%), United Kingdom (43%), Spain (41%), Czech Republic (33%) and Greece (33%).
The delay in the presentation of contests is due to the fact that The Government approved last April an extension of the bankruptcy moratorium that gave insolvent companies until December 31, 2020. Thus, due to the application of this regulation, the General Council of Economists predicts that the number of tenders will be very low, and that, consequently, “The big change” will take place next year, in 2021.
With the approval of this regulation, the Government’s objective was for creditors to oblige companies with financial difficulties, but also to avoid the collapse of the courts due to the foreseeable increase in companies with problems. «The bankruptcy moratorium in force until December 31 of this year and the limitations of judicial activity during the state of alarm have produced a decrease in bankruptcy that it is an unreal reflection on health of our business fabric ”, interpreted the president of the General Council of Economists, Valentín Pich, during the presentation.
This ‘unreal’ situation is well reflected in the data collected up to June 2020, as point to a decrease in the number of tenders of 28.7% for companies and 36.6% less in the case of individuals despite the months of confinement. Despite the possibility of availing themselves of a moratorium, economists encourage companies to go as soon as possible “to refinancing and restructuring mechanisms as well as mediation and second chances”, according to Pich’s words.
In this same line, the president of the Galician Council of Economists, Miguel Ángel Vázquez Taín, has stated, for whom «in the face of the foreseeable avalanche of competitions it is essential to appeal now, especially SMEs and freelancers, to refloating mechanisms so that they try to recover in these months in which the economic activity has begun to restart ».
Peak in the second trimester
During the press conference, the president of Refor, Alfred Albiol, insisted that In the first quarter of next year “we will start to see quite a few” bankruptcy proceedings for companies, especially in sectors related to services and tourism. “The most important peak of the wave of insolvencies will occur in the second quarter of 2021”, specified Albiol, who specified that the situation will be aggravated by the beginning of the repayment of ICO loans.
However, economists did not offer exact figures on the bankruptcies that could be registered in 2021. One of the authors of the study Alberto Velasco, specified that “it is very complicated” to establish a fixed figure, but pointed out that the bankruptcies could be triggered above the 9,000 level of the previous economic crisis.
Slight increase in 2019
The number of bankruptcy proceedings rose 3% in Spain compared to the previous year and affected 4,464 companies. Of these, a total of 1,098 belonged to the commerce sector. In addition, in 20a9 there was a 2.47% rise compared to 2018 in terms of the number of contests for freelancers, micro-SMEs and small companies, reaching 3,865 in 2019.
By communities, four regions accounted for 67% of the contests in Spain with Catalonia leading, with 1,043; followed by Madrid, with 820; Valencian Community, with 670 contests, and Andalusia, with 447.