Economists warn of the increase in business insolvencies this year and a certain slowdown next year. The General Council of Economists of Spain (CGE) has presented the study today Insolvency Atlas 2022prepared by the Registry of Forensic Economists (REFOR) – a body specializing in insolvency matters of said General Council.
The president of the General Council of Economists of Spain, Valentí Pichhas stated that bankruptcies and insolvencies will continue to rise, especially after finishing the bankruptcy moratorium on June 30. After some data conditioned by the covid in 2020 and 2021 and the end of the bankruptcy moratorium, “it has been observed a bankruptcy increase of 30% after the summer. At an accumulated level, the year 2022 could end with a growth in bankruptcy proceedings around 20%”. However, next year, the number of bankruptcy proceedings could continue to grow, but lesssince the new Bankruptcy Reform Law promotes other tools, such as restructuring plans, which would now come into play& rdquor ;.
In this regard, the president of the economists has emphasized that “now it is advisable to resort – and try to extend it to small and medium-sized companies – to restructuring mechanisms, that they are going to be promoted with the reform to try to refloat companies and prevent them from ending up in liquidation& rdquor ;.
self employed
In the presentation they have participated in addition to Pich; the vice president of REFOR, michael romero; the member of the REFOR Board of Directors, Alejandro Latorre; Economics professor and macro-financial analyst, Javier Santa Cruz, Y the technical secretary of REFOR, Alberto Velasco. Romero has highlighted that “in 2021 it has been especially remarkable the increase in the number of self-employed bankruptcies, that almost tripled & rdquor ;. In addition, he commented that “in terms of the number of insolvencies / number of companies, Spain is the second country in Europe with the lowest bankruptcy ratio: Only 13 out of every 10,000 companies file bankruptcy in Spain, well below the European average (around 47 companies in bankruptcy for every 10,000.
Latorre, a member of the REFOR Board of Directors, has predicted a “foreseeable increase in second chance mechanisms and, consequently, in bankruptcies for natural persons in 2022 – the vast majority of bankruptcies for natural persons are due to second chance –, due to the effect of the covid, as well as possible consequences derived from the increase in inflation, the price of energy and delays in the supply of certain raw materials.It remains to be seen how the second chance will evolve in 2023 after the new Law 16/2022 that presents chiaroscuro & rdquor;
For his part, the economist Javier Santacruz–who has once again collaborated on this edition of the Atlas– stated that “the Spanish economy is at a transcendental moment, not only because of the challenges and imbalances it has to face in the medium term, but also very especially for the short-term challenge of managing a slowdown in growth and a general increase in bankruptciesas well as for the beginning of repayment of the credits guaranteed by the ICOwhich constitutes a source of problems that must be taken into account for all that this implies& rdquor;.
In relation to the data collected in this edition of the Atlas, in 2021 there is a strong increase of 52% in the number of company contests compared to 2020 (7,062 in 2021 and 4,630 in 2020). In the specific block of self-employed, micro-SMEs and small businesses –which are the vast majority of our business fabric– there has been a 44% growth in 2021 compared to 2020 in the number of bankruptcies (from 4,034 in 2020 to 5,843 in 2021).
Micro-SMEs
Bankruptcy proceedings in our country have as protagonists the micropymes, companies with less than 10 workers, which according to this criterion represent 40% (39.86%) of the contests in 2021. But a decrease in the percentage of micro-SME bankruptcies out of the total is observed, since in 2020 they accounted for more than 50%. The bankruptcy proceedings of self-employedrepresent the second most abundant group in 2021: 33% of the bankruptcies (32.86%), so that a third of the bankruptcies are already self-employed.
Until the third quarter of this year, the number of company bankruptcies increased compared to the same interval in 2021, from 3,169 to 3,618, and exceeds the same interval in 2019 (3,383). Likewise, the greatest increase in this same interval occurs in competitions for self employed2,330 in 2022 compared to 1,446 in 2021 (which represents a 61% annual increase) and 326 in 2019, that is, 7 times more than in 2019.
Physical persons
The contests of Physical persons they grow by 23% in 2021 compared to 2020 (they go from 4,032 to 4,975) and represent 41% of all bankruptcy proceedings. The number of bankruptcies for natural persons is multiplied by 2.5 in 3 years (from 2018 to 2021). For REFOR, this fact may be due to the fact that natural persons have been the most vulnerable to the economic crisis derived from the pandemic, as well as the fact that the Supreme Court ruling of July 2, 2019 has allowed a greater exemption of public credit in second chance.
Regarding the territorial distribution of bankruptcies, all the autonomous communities present increases in bankruptcies in 2021 compared to 2020 despite the bankruptcy moratorium of 2021, except La Rioja. Catalonia it goes from 1,253 contests in 2020 to 2,446 in 2021, and the Community of Madrid from 859 in 2020 to 1,259 in 2021. Catalonia is clearly the community that experiences the greatest growth in 2021.
Likewise, referring to the relationship between the number of companies and the number of bankruptcy proceedings, 0.21% of Spanish companies went to bankruptcy in 2021 (approximately one in every 476 companies). Catalonia is the autonomous community in which the most bankruptcies took place in relation to the number of companies, with 0.39%. They are followed by the Valencian Community, with 0.25%, and the Basque Country and Asturias, with 0.24%. Then Madrid, with 0.23%. The Autonomous Communities with the lowest percentages of bankruptcies in relation to their number of companies are La Rioja, with 0.08%; Extremadura, with 0.07%; and Ceuta and Melilla, with 0.03%.
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Another piece of data that REFOR has highlighted is the upward trend of express tenders in the third quarter of 2022: first quarter (-1.5%), second (0%) and third (69%), “what comes to indicate that the bankruptcy situation is not positive, since, having no mass, these companies go directly to liquidation”, according to the economists. Compared with other EU countries,
Compared to other EU countries, in Spain, the trend is towards an increase in bankruptcies. An increase in insolvencies is expected throughout 2022 and 2023 in most countries of the world – among them Spain – after the unusually low levels registered during the pandemic.