On June 30, the bankruptcy moratorium, which has been extended since the pandemic, will finally end. This economic measure was implemented in April 2020 as a safeguard to protect companies needing time to restore their solvency. Once the obligation for directors of commercial companies to file for bankruptcy is reactivated, a new scenario will unfold.
Increase in Defaults and Lack of Liquidity
Delinquency surged significantly in Spain in 2021. According to data from consultancy Prime Yield, the stock of overdue loans in the financial sector reached €82.4 billion by the end of last year. This situation is expected to worsen from July 1, with the filing of bankruptcy proceedings coinciding with the expiration of the grace periods for ICO loans granted to thousands of companies.
Setting aside the so-called “zombie companies,” which have long been unviable and are now set to disappear, there are other companies with survival prospects in the bankruptcy phase. These companies must now face liquidity shortages within a more complex framework concerning traditional banking. Credit has tightened, mergers have reduced the number of available entities, and the anticipated interest rate hike may accelerate due to rampant inflation.
Liquidity is always a priority for any company. However, in the current context, seeking financing is more complex than before the pandemic. Economic instability has increased with the Ukraine war, slowing the pace of recovery, particularly in sectors heavily impacted by rising prices in raw materials, energy, and transportation.
Financial Alternatives
Seeking alternative financing to traditional banking has become a necessity for most companies, especially SMEs. Although this is new territory for many entrepreneurs, it is essential to broaden the range of financiers to meet business plans and ensure company viability.
At Kaizen Consulting, we specialize in maximizing financing options for any company, advising on the best alternatives in each case to achieve the necessary liquidity for their projects. The range of financiers has changed, and understanding all available market options is now vital for the continuity of businesses.
Kaizen Consulting works with over 200 financiers and has helped more than 100 companies secure liquidity for their operations. Our working philosophy includes accompanying clients until they obtain sufficient liquidity to fulfill their business plans, seeking tailored solutions from all available market options.
The bankruptcy phase is not synonymous with a company’s demise. However, a lack of liquidity is. Therefore, we always recommend professional advice to secure financing. Contact us, and we will personally study your case.
