“Avalanche” of bankruptcies announced this summer

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Tourism may be making a strong comeback in Mallorca and the rest of the Balearic Islands, but there are serious concerns that, despite the recovery, there will be many bankruptcy proceedings this summer.

These concerns stem in part from current trading conditions, but more so from Covid measures. Since 2020, there has been a moratorium on foreclosures and bankruptcy applications. This moratorium is due to expire at the end of June. At the same time, ICO loan repayments become due. These were loans from the Spanish Instituto de Crédito Oficial, the official credit institute, which depends on the Spanish Ministry of Economic Affairs.

The Technical Director of the Fundación Impulsa for the Competitiveness of Balearic Companies, Antoni Riera, says: “There will be no more extensions. They are not justified, despite the impact of the Russian-Ukrainian war. Economic reactivation started and therefore there is no justification. Businesses that are not viable will therefore be subject to insolvency proceedings. There will be a significant increase in these. »

Jordi Mora, the president of the pimem federation of small and medium-sized enterprises, believes that there could still be an extension of the moratorium. At present, he notes, “we don’t know what will happen” after June 30. “The moratorium has already been extended several times. If the government considers that the economic recovery is not consolidating, it may extend it again.” There are, he admits, “a lot of uncertainties”.

Regarding the ICO Credits, Mora points out that the grace period was extended by six months at the end of last year. An official request has been made to the government to extend this period for another twelve months. At the end of June, the loans have to be repaid, but many companies are still in a difficult situation because of everything that has happened and now also because of energy costs and rising raw material prices.

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