Tuesday, November 17, 2020 - 01:25
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Company bankruptcies are already tripling in the new normal: 435 in June
The Bank of Spain warns that the utility of ERTEs to sustain employment is running out
The Government will extend until March 31 of next year the shield on companies that under normal conditions would fall into suspension of payments or would go to bankruptcy.
In this way, it will avoid a wave of bankruptcies and the collapse of the commercial courts as of January 1, which is
when the moratorium imposed last April expires.
This was announced yesterday by the Vice President of Economic Affairs,
, to those attending the constitution of the new table
of social dialogue on Recovery, Transformation and Resilience that will serve to address the use of these European funds The financial situation of tens of thousands of companies in Spain has seriously deteriorated with the failed recovery of the summer and threatens to generate a avalanche of suspension of payments as of December 31, which is when the current shield expires for debtors and creditors to use this legal tool.
The measure responds to
the repeated demand of the Bank of Spain to the Government to face the situation
, although far from what the banking supervisor considers.
Pablo Hernandez de Cos
, has repeatedly asked the government to discriminate between viable companies that can receive survival aid and zombie companies, which will not be able to survive in the coming months even if health restrictions have been exceeded.
For the latter, he has proposed
that the bankruptcy law be amended to facilitate its liquidation.
According to the College of Administrative Managers, the current moratorium is postponing a flood of bankruptcies.
Until October, according to data from the Bank of Spain, there were
4,290 procedures compared to 5,478 corresponding to the same period of 2019
Even with the legal shielding, the managers estimate that 6,500 companies will end up filing bankruptcy, a measure that by next year will extend at least to
22,000 companies with a workforce of 140,000 workers.
The moratorium will be announced today after the Council of Ministers, which also plans to approve measures to support self-employed workers and another extension to the granting of guarantees from the Official Credit Institute (ICO).
The 100,000 million of the ICO line have served tens of thousands of companies to obtain financing and liquidity from the banks with which to survive the 10 months of crisis that have elapsed since the outbreak of COVID-19.
companies have stopped using 20,000 million that are still available.
In business areas, it is considered that, without the combination of both extensions (of liquidity through the ICO lines and shielding against insolvencies) an indiscriminate wave of bankruptcies would be inevitable since unviable defaulting companies would end up dragging creditor companies with viability.
In addition to the collapse of the commercial courts, the mass bankruptcy of companies of all sectors and sizes would increase the dreaded risk that the Bank of Spain has expressed about the degeneration of the current economic crisis into a financial crisis.
Its governor, Pablo Hernández de Cos, defended last week the mechanisms for restructuring corporate debt, write-offs and bankruptcy, to prevent a liquidity problem from becoming one of solvency.
To do this, he asked to combine the extension of these aid and carry out a quick analysis of the bankruptcy mechanism that allows restructuring the debt of viable companies or granting them write-offs and, on the contrary, that those that are not disappear,
leaving those who are going to suffer a structural shock to 'die'
, in order to have an efficient allocation of resources.
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