The bankruptcy has had a rebound in the first half of this year after in the last five years there was a sensitive drop in the bankruptcy process. As a consequence of the worsening in some of the macroeconomic data of the Spanish economy. Although the good news comes from the fact that these kinds of legal proceedings are being resolved successfully in the interests of companies. Despite the fact that the numbers seem to indicate that a change in trend is taking place.
In this general context, the number of bankrupt debtors reached 1.648 in the first quarter of 2019, which represents a 1,7% increase with respect to the same period of the previous year, according to the latest data collected by the National Institute of Statistics (INE) through the Bankruptcy Procedure Statistics (EPC) for the first quarter of this year. By type of contest, 1.558 were volunteers (2,1% more than in the first quarter of 2018) and 90 were necessary (5,3% less). Taking into account the type of procedure, the ordinary ones decreased 33,0%, while the abbreviated ones increased 6,2%.
Of the 1.648 bankrupt debtors in the first quarter, 1.147 are companies (individuals with business activity and legal persons) and 501 individuals without business activity, which represents 69,6% and 30,4%, respectively, of the total debtors. The number of bankrupt companies increased 4,0% in the first quarter of 2019 compared to the same period last year. According to the legal form, 81,0% of the companies declared bankrupt are Limited Liability Companies. 32,9% of the companies declared bankrupt are in the lowest segment of business volume (up to 250.000 euros) and are mainly Limited Liability Companies.
Debtor companies with fewer employees
26,1% of the companies declared bankrupt have commerce as their main economic activity and 14,1% the rest of services, according to the official data made by the INE. Regarding the number of employees, 53,2% of the total companies declared bankrupt have less than six. And, among these, 29,2% have no employees. 22,2% of the total number of companies declared bankrupt in the first quarter is 20 or more years old. For their part, 22,8% are four or less years old. 28,4% of the companies declared bankrupt with four or less years of antiquity are in the commerce sector. For their part, 55,3% of the bankrupt with 20 or more years of seniority are dedicated to commerce and industry and energy, according to the official report.
Catalonia and the Community of Madrid account for 47,1% of the total debtors bankrupt in the first quarter of 2019. While on the contrary, Extremadura presented the largest annual decrease in the first quarter (-42,1%) and Illes Balears the largest increase (92,6%), according to the latest data collected in the National Institute of Statistics (INE). Another of the most relevant data that is revealed in this official report resides in the fact that in 2019 the quarterly rate is 10,7%, it is the highest of the period considered.
Affected Stock Companies
Another data indicates that according to the Registry of Judicial and Forensic Auditors (RAJ) of the Institute of Chartered Accountants of Spain, 90% of bankruptcy proceedings in Spain end in liquidation. While on the contrary, about 70% conclude because there are not enough assets in the companies that can be liquidated. In order to face payments to creditors. In a process that can become very complex and that requires the hiring of professionals who know how to channel the actions to bring to fruition the derivations of this regulated judicial process.
In any case, it is convenient to know what must be done in these cases because any error can cost very dearly to the companies that are affected by the bankruptcy. Where it cannot be forgotten that some companies that have been listed or continue to be listed in the main Spanish equity indices have gone through this situation. One of the best known cases has been that of sniace that stopped trading many years ago and then resumed its way in the financial markets. So that at the moment it is trading below 0,20 euros per share and where small and medium investors have left many euros along the way.
How is the bankruptcy process developed?
One of the first steps that must be taken is the presentation of a declaration order and that is formalized before the Commercial Court of the province where the debtor has the business headquarters. This is one of the main reasons why those affected must have the presence of a lawyer and solicitor. Because the bankruptcy process can be channeled in one direction or another and on which depends what may happen to the company. On the one hand, that the contest to present an agreement begins. What does this mean? Well, the company is still in business, as it did until now. To the extent that it maintains its directive or management bodies.
While on the other hand, the contest can be opened, but in this case to liquidate the company. In which case, their activities would cease. Where the figure of the bankruptcy administrator would be in charge of liquidating the business in order to pay the debts to the creditors. Like the social administration bodies, they would be replaced by the administrator. That is to say, there are very important differences between the fact of opting for one or another model in the management of the procedural competition. And that is what will determine the success of this operation through this legal figure.
One of the first steps that must be taken is the presentation of a declaration order and that is formalized before the Commercial Court of the province where the debtor has the business headquarters. This is one of the main reasons why those affected must have the presence of a lawyer and solicitor.