"Avalanche" of bankruptcies in Mallorca forecast this summer

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

These concerns arise in part from current trading conditions but more so because of Covid measures. Since 2020, there has been a moratorium on foreclosures and claims for bankruptcy. This moratorium is due to expire at the end of June. At the same time, repayments of ICO loans become due. These were loans from Spain’s Instituto de Crédito Oficial, the Official Credit Institute, which comes under the Spanish government ministry for economic affairs.

The technical director of the Fundación Impulsa for business competitiveness in the Balearics, Antoni Riera, says: “There will be no more extensions. They are not justified, despite the impact of the Russian-Ukrainian war. Economic reactivation has started and so there is no justification. Businesses which aren’t viable will therefore be subject to insolvency proceedings. There will be a significant increase in these. “

Jordi Mora, the president of the Pimem small to medium-sized businesses federation, feels that there may still be an extension to the moratorium. At present, he notes, “we do not know what will happen” after June 30. “The moratorium has already been extended several times. If the government considers that economic reactivation is not being consolidated, it can extend it again.” There is, he admits, “a great deal of uncertainty”.

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 for another twelve months. At the end of June, the loans have to be returned, but many businesses are still in a difficult situation due to everything that has happened and now also because of energy costs and the rise in prices of raw materials.

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