The commercial courts end the year overwhelmed with bankruptcies of natural persons but not, on the other hand, with bankruptcies of companies. Contrary to some forecasts, company bankruptcies have decreased this year in Spain.
According to data from the College of Registrars, payment suspensions have fallen by 11% from January to September, going to 3,027 contests in 2023 when 3,619 occurred in the same period of the previous year.
In the absence of official data at the end of this year, the firm Solunion recently published a study that predicts a drop in business contests of 24% this year as a whole, a percentage that contrasts with the increases of 21% and 30% registered in 2022 and 2021, respectively. The fall, according to this firm specialized in credit and surety insurance, will occur in almost all sectors of activity and autonomous communities.
“Company bankruptcy proceedings have been rare in Barcelona and this is explained because the country’s economy is evolving positively,” says Álvaro Lobato, chief magistrate of commercial court number 2 of Barcelona. And despite the effects of the increase in interest rates, inflation is more controlled (3.2%) and the default rate is at a minimum, at 3.6%, according to data from the Iberinform platform and the Bank of Spain relating to the month of September.
“The majority of companies that had requested ICO credits to face the effects of the pandemic are returning them,” reasons Cristian Valcárcel, lawyer at the Barcelona firm RCD, in the same sense. The specialist also attributes the drop to the few micro-business contests, due to a failure in the electronic system of the administration of justice that makes it impossible for the process to be carried out.
Looking ahead to next year, forecasts point to a growth in bankruptcy proceedings. “The drop in competitions in 2023 has also been marked by a strike by lawyers in the administration of justice in the first quarter of the year that slowed down procedures,” notes Vincent Pérez, head of Credit Analysis at Solunion, in the report. According to this company, bankruptcy proceedings will grow between 10 and 20% next year. “It is foreseeable that bankruptcy proceedings will grow in volume after the fall of 2023. A symptom of a possible increase is the growth in non-payments of commercial invoices that we have been observing since the summer”
Furthermore, in 2024, the end of the moratorium on ICO loans as well as the reform of the bankruptcy law may continue to have effect. “2023 has been a year of transition and learning of the new standard by the entire sector,” says Pérez.
Along the same lines, Valcárcel explains that in the last quarter of this year, interest has grown on the part of local companies to take advantage of the figure of restructuring plans, which allow the company to restructure the debt that the company has with its creditors with the objective of avoiding bankruptcy and the very probable liquidation of the business.
“There is still a lack of cultural change, both on the part of companies and financial entities, but interest is growing and we are beginning to have jurisprudence to take as a reference,” he points out. In fact, in September the ruling in the Celsa case came to light, which approved a restructuring plan that allowed creditor funds to convert debt into company shares.
The drop in bankruptcy proceedings by companies contrasts with the high number of bankruptcy proceedings by natural persons – individuals and self-employed workers – who request to be exonerated from debts through the so-called Second Chance mechanism.
According to statistics from the College of Registrars of Spain, the figure in the third quarter has tripled compared to the same period of the previous year, going from 1,676 to 3,027 contests. In the previous quarter, from April to June, growth also tripled. “The reform of the bankruptcy law has streamlined this type of procedures and in addition, the commercial courts have had to assume a part that until last year was carried out by the courts of first instance,” comments Judge Álvaro Lobato.
Among the group of bankruptcy administrators, voices have also been raised against this phenomenon since the new bankruptcy law does not make its figure mandatory. “The mischief is growing in contests without dough (express contests) especially among individuals who cannot afford their consumer loans,” Diego Comendador, president of the Aspac association, recently warned this newspaper.
