Business insolvencies hit Spain hard and specially Valencia where 620 companies have gone bankrupt, as stated in the Euler Hermes Report.

The concentration of builders and promoters in the Valencia Region is causing the high number of insolvencies. The leader in insolvencies is Catalonia, which records 25% of all processes, while the third community is Madrid, whose total number is closely followed by Valencia, while the fourth community is Andalusia with a total of 415 bankruptcies.

Euler Hermes's report emphasizes the critical economic situation in the country as a whole. Spain will end this year as the global leader for the second consecutive year in the ranking of countries recording higher growth in the number of corporate insolvencies, an increase of 100% of insolvencies (the total will exceed 5,500) compared to 2008, when they grew by 200% over 2007.

In the world ranking Spain is followed by Estonia, whose bad debts increased by 91%; Ireland, which recorded a growth of 85%, Latvia, which reached 83%, and Lithuania, whose bankruptcies rose by 80%. The global average increase in corporate insolvencies in 2009 stood at 33% compared to 2008, which increased by 26%.

"Spain has made a dismal record, but it will not keep falling," said the director of economic studies of Euler Hermes, Karine Berger. Spain business insolvencies have increased six fold in two years, although the trend over the last two months of 2009 confirms a fall. Forecasts for next year suggest that bankruptcies tend to stabilize at a high level close to these figures.

"In 2010 there may still be spikes in corporate insolvencies, the situation has bottomed out but the launch will occur at very low speeds," explained the director of risk information, claims and recovery of Euler Hermes Credit, José María Cárdenas.

By sector, the industry is most affected with an increase of 98% over 2008 and a total of 1,073 procedures. In second place was trade, with a growth of 97% and a total of 823 bankruptcies. The construction sector ranked third this year, an increase of 73% of bankruptcies over 2008 and a total of 1,062.

Source : Las Provincias