Wednesday, October 5

Bad debts will grow 24% in 2021 compared to 2019 and another 26% in 2022


A closed shop in Barcelona to stop coronavirus infections.

A closed shop in Barcelona to stop coronavirus infections.
Ferran Nadeu

The avalanche of bankruptcy proceedings foreseen by the effects of the coronavirus in the Spanish economy it will not be as high as thought. The number of insolvencies will increase in 2021 by 24% compared to 2019, which makes Spain a world leader, while in 2022 they will increase another 26%, according to estimates by the consultancy firm Euler Hermes, collected by the General Council of Economists ( CGE). But the number of bankruptcies is still low, with a rate of 13 out of every 10,000 companies, compared to the European average, which is around 52. “The bankruptcy moratorium in force until December 31, 2021 has served to contain the foreseeable bankruptcy increase; although it does not seem that once the moratorium is over there will be an accused bankruptcy avalanche as high as previously thought, “explained the president of the General Council of Economists, Valentín Pich, during the presentation of the Bankruptcy Atlas 2021.

In 2020 there was a 3.3% decrease in the number of contests of companies compared to 2019 (4,630 in 2020 and 4,789 in 2019), which in the case of the self-employed, micro-SMEs and small companies (most of the Spanish business fabric) the decrease was 4% compared to 2019 (from 4,154 in 2019 to 4,008 in 2020). For this reason, economists insist on promoting mechanisms that expedite the exit from insolvency to autonomous and micro-businesses.

In addition, also in 2020 a serious trend that will be maintained during 2021, in the opinion of economists, as is the increase in express contests, which are opened and closed at the same time due to lack of liquidity of the companies. “This means that the quality of the bankruptcy is worsening because it has to do with the liquidation and gives a thermometer of how the bankruptcy situation is in our country,” explained the technical secretary of REFOR, a body integrated in the CGE, Alberto Velasco.

Also Read  If health and education are essential services in Spain, why not housing? | Irene Baqué

According to data from the General Council of the Judiciary included in the report, the total number of express contests was 1,923 last year compared to the total number of contests (4,630), so that they represent almost 42%, compared to 28% in 2017. By autonomous communities, where express contests increase the most compared to 2019 are Galicia (73%), Valencian Community (43%), Madrid Community (20.31%) and Catalonia (2.6%). Other Autonomous Communities experienced decreases such as Andalusia, Aragon, Castilla y León and Castilla-La Mancha.

Submerged economy

On the other hand, economists have again warned about the existence of a dangerous underground bankruptcy economy as there are many companies that do not go to the bankruptcy to solve their financial crisis and opt for the simple closure and although the data seem to indicate a decrease in this underground economy, the bankruptcy moratoriums “may be masking other realities,” according to the CGE. Fogasa payments, which include the legal route of insolvencies (bankruptcy) but also when a company closes a business, have decreased from January to December 2020 by around 8.4% and the ratio that compares them with the The number of bankruptcy proceedings has also decreased by 6.6%, compared to 2019, standing at 1.34.

As Velasco explained, this ratio of 1.34 shows that at least there should be 34% more bankruptcies, as there are more payments from FOGASA, which come from insolvencies, than bankruptcies through this legal mechanism. “This is important in the face of the bankruptcy reform because some companies consider that it is not worth entering the bankruptcy and it is necessary to see what measures can be implemented to avoid this,” added Velasco.

Also Read  Tourist tax: yes for Altea and no for Xàbia, El Campello and l'Alfàs

Bankruptcy reform

Economists have recognized that the Bankruptcy Reform Bill has “quite a few issues to resolve” although it “has good things.” Thus, the president of REFOR, Juan Carlos Robles, has highlighted the advance detection of probable insolvency, the promoting restructuring, the greater weight of the economic content in the management of insolvencies or that the powers in bankruptcies of natural persons have returned to the commercial courts. But he has criticized the excessive weight of the debtor’s role in micro-business procedures, the step back in second-chance mechanisms, the deregulation of insolvency professionals or the lack of effective testing that guarantees the full functioning of the new electronic procedure. .


www.informacion.es

Leave a Reply

Your email address will not be published.