Countdown to bankruptcy: the last stop

On 30 June, the bankruptcy moratorium that was extended after the pandemic will definitively come to an end. This economic measure was put in place in April 2020 to safeguard and protect companies that needed time to recover their solvency. Once the duty of company directors to file for insolvency proceedings is reactivated, a new scenario opens up.

Increasing defaults and lack of liquidity

Non-performing loans rebounded strongly in Spain in 2021. According to data from the consultancy firm Prime Yield, the stock of non-performing loans in the financial sector reached 82.4 billion euros at the end of last year. This situation is expected to worsen from 1 July, with the filing of bankruptcy proceedings and which, moreover, coincides with the expiry of the grace periods of the ICO loans that were granted to thousands of companies.

Leaving aside the so-called “zombie companies,” which have long been unviable and are now doomed to disappear, there are other companies that do have a chance of survival in the insolvency phase and now have to face the lack of liquidity in a more complex framework as far as traditional banking is concerned. Credit has tightened, mergers have reduced the number of banks to turn to, and rate hikes have been announced and may even accelerate because of skyrocketing inflation.

Liquidity is always a priority for any company. But in the current context, the search for funding is more complex than it was before the pandemic. Economic instability has also increased with the war in Ukraine and the pace of recovery has slowed, especially in some sectors hit hard by soaring commodity, energy and transport prices.

Financial alternatives

The search for alternative financing to traditional banking has become a necessity for most companies, especially SMEs. Although this is new territory for many entrepreneurs, it will be essential for them to open up the range of financiers to fulfil their business plans and ensure the viability of the company.

At Kaizen Consulting, we are experts in maximising the financing options of any company, advising on the best alternatives in each case to achieve the necessary liquidity for your projects. The range of funders has changed, and knowing all the options that exist in the market is now a vital task for business continuity.

Kaizen Consulting works with more than 200 funders and has helped more than 100 companies find liquidity for their businesses. Our work philosophy includes accompanying clients until they obtain sufficient liquidity to fulfil their business plan, looking for tailor-made solutions among all those offered by the market.

The insolvency phase does not imply the disappearance of a company. But lack of liquidity does. That is why we always recommend professional advice on how to obtain financing. Contact us and we will analyse your case personally.

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