The current insolvency process in Galicia
The long-awaited legislation regulating the insolvency situation of Spanish companies has finally arrived with Law 22/2003, Bankruptcy. Since that important event, various legislative amendments have emerged with insolvency significance. At present we could consider as the “final” text the CONSOLIDATED TEXT OF THE INSOLANCY LAW AFTER THE ROYAL DECREE LAW 1/2015 OF SECOND CHANCE, on which these reflections will be based.
Bankruptcy legislation has arisen from the need to articulate a procedure by which entities that are in a current or imminent insolvency situation could have a fairer and more equitable legal figure with their creditors and, as far as possible, retain your activity.
The reality has been very different since it was approved.
the Bankruptcy Law: between 90 and 95% of the bankrupt end up liquidating their companies. It seems that, despite the flexibility provided by current legislation in relation to insolvency and its attempts to adapt to the crisis situation, it has not achieved the expected results. The causes are of various kinds, but perhaps the main one is the delay of entrepreneurs in voluntarily requesting the bankruptcy. Should the business fabric be made aware and educated so that the figure has the expected effect?
In my professional career as a bankruptcy administrator in Galicia and, ignoring the mentality of businessmen in general in the rest of Spain, I must point out that the Galician businessman (we must not forget that most of the business fabric in Spain, and in Galicia in particular, it is made up of freelancers and SMEs), sees the birth and growth of its company, dedicates all its time and effort to it and, as if it were a child, does not want to see it die. And that is why, taking into account the success achieved in bankruptcy proceedings, their application is the last resort they use: before they invest all their personal assets in your company and only when there is nothing to do do they go to court of the mercantile to request it. It's not that the company is sick, it's that it is dying and nothing can be expected other than its disappearance.
It is also true that in this autonomous community the income is obtained mostly from trade, services and tourism, there is not much industry and, in recent times, the sectors in which it operated were the most affected by the crisis (shipyards, real estate development and…, of course all their assistants)
I am enormously surprised to find in each bankruptcy that I meet after my appointment the perception of the employer regarding the bankruptcy process and, especially of the figure of the bankruptcy administrator: the first thing is a punishment and we their "jailers".
But, in addition, the creditors do not feel represented by the bankruptcy administration either, a curious aspect, because, as far as I know, we are the defenders of their interests.
The general trend is not that, occasionally, an unforeseen event that has special economic significance in the company occurs and the contest is requested. What most frequently happens is that the collection and payment periods are so disparate that the entity has to resort to external financing to cover the treasury difficulties (usually more expensive than what the suppliers can offer). This situation is repeated with such frequency and reiteration in the same bankruptcy that the businessman, in his desperation, endorses, yields, lends…, in short, buries his personal assets in the company.
To do this, of course, it has to present sound financial statements: it does not make provisions for bad debts, it overvalues its inventories and other "accounting engineering tricks" that it ends up believing. And that is what actually ends up in the commercial courts: corpses impossible to resurrect.
It is useless, in my opinion, to use the threat of the guilty qualification to urge companies to request the contest on time: on the contrary, perhaps because of that fear there are so many that disappear without ever being known about them, leaving to their totally defenseless creditors and, depending on the importance that the debtor has for them, they are forced to close their own facilities.
Still at this point, after 12 years of bankruptcy law there is no business culture on the matter: the lawyer's fees are scary instantly, the bankruptcy administration terrifies, the possibility of a solution that can be granted by the bankruptcy figure is completely ignored… for they are a punishment that they do not understand because they have dedicated their entire working life to them without any intention of harming anyone.
It is surprising that some are noted as a victory that there are fewer and fewer contests declared: with regard to Galicia, the evolution since 2012 and to date has actually decreased in number, but it is worth asking:
How many companies are left in Galicia after this long period of crisis that seems to never end?
These are the data:
Statements of competition Spain (09/28/2015)
| 2012 | 2013 | 2014 | 2015 | |
| TOTAL YEAR | 8,168 | 9,122 | 6,755 | 3,341 |
Declarations of competition Galicia by provinces (09/28/2015)
| 2012 | 2013 | 2014 | 2015 | |
| A CORUÑA | 208 | 222 | 169 | 94 |
| LUGO | 63 | 61 | 63 | 3. 4 |
| OURENSE | 32 | 38 | 36 | 30 |
| PONTEVEDRA | 199 | 187 | 173 | 58 |
* Source: infoconcursal.es/estadsticas
Declarations of competition in Galicia 2012-2015
Percentage that, with respect to the total of Spain, represent the declarations of insolvency in Galicia in recent years:
| 2012 | 2013 | 2014 | 2015 |
| 6.15% | 5.57% | 6.53% | 6.47% |
Despite the data reflected above, and according to the mercantile statistics for the year 2014 published by the association of property and mercantile registrars of Spain, the number of incorporations of mercantile companies in Galicia represents, with respect to the totality of the national territory 4.55%, compared to 5.41% of their extinctions.
In addition, 53,083 entities have deposited the annual accounts for the 2013 financial year in Galicia, which are understood to be not extinct and which represent 5.75% of the total for Spain.
Could it be that in our autonomous community there are no longer any companies that can request bankruptcy? I leave it there…
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