In recent years, the economic situation of many people has been affected due to the Covid-19 health crisis. Many citizens have lost their jobs or seen their income reduced, leading to an increase in insolvency and bankruptcy filings. In this context, the Second Chance Law has been a key tool to allow citizens to restructure their debts and start over.
An example would be a self-employed worker in the hospitality industry who was affected by the restrictive measures imposed by the pandemic, which drastically reduced his clientele. As a result, his business was not able to face the accumulated debts, which led the businessman to request an insolvency process under the Second Chance Law. Thanks to this legislation, he was able to restructure his debt and start a new business, this time with a business model adapted to the current situation.
Now, insolvency proceedings increased by 30% in the last quarter of 2022, due to the Second Chance Law. In the last quarter of 2022, insolvency proceedings in Spain have experienced an increase of 30%. This situation has been attributed mainly to the entry into force of the Second Chance Law, a regulation that seeks to facilitate the economic recovery of individuals and small companies that are in a situation of insolvency.
According to data from the National Institute of Statistics (INE), during the last quarter of last year a total of 15,000 insolvency proceedings were registered, which represents an increase of 30% compared to the same period of the previous year. Of these, 70% correspond to individuals and the remaining 30% to small companies.
According to provisional data from the Public Bankruptcy Registry, which depends on the Association of Registrars, the number of individuals who requested bankruptcy in 2022 increased by 32.56% compared to the previous year, reaching a figure of 9,669 applicants.
In the last quarter of 2022, which coincided with the entry into force of the Second Chance Law, the bankruptcy process began for 4,407 people in a situation of insolvency, which represented a significant increase compared to previous quarters. In comparison, bankruptcies of legal persons (companies) increased slightly by 0.25%, with a total of 4,755 bankruptcies in 2022.
The Second Chance Law came into force in 2015, but it was in the last year that it began to be applied more widely. This regulation allows individuals and small companies that are in a situation of insolvency to request a procedure that allows them to restructure their debt and reach an agreement with their creditors to pay it within a determined period of time.
The objective of the Second Chance Law is to offer a solution to those people who are in a situation of insolvency and who, therefore, cannot meet their debts. Thanks to this regulation, these people have the opportunity to reorganize their assets and pay their debts in a more flexible way.
However, the Second Chance Law is not the only cause of the increase in insolvency proceedings in the last quarter of 2022. The economic situation resulting from the pandemic also played a role, which has particularly affected small businesses and people with less resources.
In conclusion, the 30% increase in insolvency proceedings in the last quarter of 2022 reflects the need for a solution for those people who find themselves in an insolvency situation. The Second Chance Law has been an important tool in this regard, but much remains to be done to ensure a sustainable and fair economic recovery for all.