Valencia Community officials reported a 33% rise in bankruptcy filings in August compared with the same month last year. The surge followed the end of an extraordinary moratorium on filings that the government had put in place during the health crisis and economic downturn, which concluded in July, according to the supervisory body’s statement.
Data from the Trade Registry shows the competition activity in the region climbing to 32 cases, with Valencia registering 33% more filings and standing 17% above the national average. The Valencia region, Madrid, and Catalonia together account for about seven of every ten cases nationwide, making them some of the hardest hit areas in the country.
José Andreu, a member of the Valencia Community Supervisory Board responsible for judicial affairs, described the trend as consistent with the July withdrawal of the crisis-era moratorium. This context underscores how policy changes can influence filing activity and court backlogs across the region.
Earlier coverage noted a historic spike in Alicante during the first quarter of the year. The increase was not driven solely by companies seeking protection; it marked a historic shift in which private citizens initiated more proceedings than businesses and freelancers, with activity rising by nearly 35% year over year.
Concern over a wave of filings as the bankruptcy moratorium ends
An uptick in filings has been linked by experts to the end of the pandemic era and to measures similar to the Second Chance Law, which in some cases allows individuals to discharge debts after demonstrating sustained effort to repay but inability to settle obligations. Early-year figures show Valencia among Spain’s autonomies with the sharpest growth in proceedings, surpassing the national average by about 15.6%.
Andreu noted that a significant portion of the increase stems from service-sector firms and freelancers facing pressure. Uncertainty surrounding the upcoming bankruptcy regulation has added to the strain, with spillover effects caused by the ongoing geopolitical tensions and regional economic adjustments contributing to the rise in cases.
The pandemic era and the push toward a new bankruptcy framework
Backstory details point to impending changes in bankruptcy governance slated to take effect later in the year. The reform aims to broaden preventive restructuring options, improve debt relief mechanisms, and enhance the efficiency of restructuring and liquidation processes. The reform is designed to help financially distressed businesses survive and reorganize, potentially lowering the number of new cases in the months ahead when the new pre-bankruptcy framework takes hold.
Valencia’s auditors highlighted the main objectives considered beneficial for the economy during the recovery phase. The Law Reform on bankruptcy envisions streamlining procedures, reducing costs, and facilitating the continuity of debtors, including companies and professionals facing financial hardship without immediate resort to formal insolvency. This stance reflects a broader policy intent to preserve productive capacity and safeguard employment during economic stabilization.
Additionally, auditors aligned with the Court of Accounts emphasize the possibility for individuals engaged or not engaged in business to avoid a new, more flexible debt-relief process and the liquidation of habitual residences and other essential assets. This perspective underscores the practical impact of the reform on households and small enterprises navigating financial strain.
Professional guidance from Certified Public Accountants on the new bankruptcy regulation underscores their role in restructuring plans and in managing bankruptcy cases as well as valuing companies or their productive units. The evolving framework is expected to shape how restructuring professionals assist clients through complex financial reorganizations and asset evaluations.