Experts warn that more than 10,000 businesses in Spain could enter insolvency proceedings by 2025, following the end of the accounting moratorium that has been in force since the pandemic. This exceptional measure allowed thousands of companies, especially in sectors such as hospitality and commerce, to avoid liquidation due to losses during the most difficult years of the health crisis. However, with the arrival of January 1, 2025, regulations will revert to pre-pandemic standards, putting many companies in a complicated financial situation.
What Is the Accounting Moratorium and Why Was It Key During the Pandemic?
The accounting moratorium was a measure adopted by the Spanish government to give a respite to companies affected by the economic consequences of COVID-19. It allowed companies to avoid having to dissolve their companies for incurring losses that reduced their net worth below half of the share capital, which is grounds for dissolution under the Capital Companies Act. This regulatory relaxation was vital in avoiding a massive wave of closures during the pandemic and helped many companies to continue operating despite the economic difficulties.
Thanks to this measure, thousands of businesses managed to avoid liquidation, but with the end of the moratorium, experts fear that economic reality will once again hit those that have not been able to fully recover.
What Does the End of the Moratorium Mean for Companies?
As of January 1, 2025, companies in Spain with significant losses will have to return to compliance with the regulations in force before the pandemic. This means that, if their net worth falls below half of their share capital, they will be obliged to restore their financial situation, increase their capital or proceed to dissolution to avoid becoming legally insolvent.
The return to the previous rules means that many companies that have been kept afloat by the moratorium could face the need to file for insolvency proceedings if they fail to stabilize their accounts before the deadline. According to insolvency lawyers, this situation could cause a “perfect storm” for sectors that have not yet managed to fully recover, such as hospitality and retail, which were particularly hard hit by health restrictions and changing consumer habits during the pandemic.
Hospitality and Retail, the Most Vulnerable
The hospitality and retail sectors are likely to be the hardest hit by the end of the accounting moratorium. During the pandemic, these sectors saw their revenues drop drastically due to mobility restrictions and closures, resulting in significant economic losses. Despite the reopening and return to normalcy, many businesses in these sectors have not been able to recover their pre-health crisis turnover levels.
Experts warn that, without additional measures, the end of the moratorium could be a very hard blow for these industries. Many entrepreneurs are still trying to clear debts accumulated over the last few years, and the return of pre-pandemic regulations could force them to make difficult decisions such as declaring insolvency.
A Call for Prevention and the Search for Solutions
The situation has generated concern among lawyers, economists and business associations, who warn of the need to take preventive measures to avoid a massive business crisis in 2025. They recommend that companies still carrying significant losses seek legal and financial advice in advance to assess their options before the moratorium ends. This could include restructuring debt, seeking new investors or selling non-core assets to strengthen the balance sheet.
In addition, some experts advocate the need for a government-wide action plan to provide alternatives for those companies that are still struggling. While the accounting moratorium bought time, additional incentives may be needed to help companies transition more smoothly to the new regulatory normal.
The Need for a Change in Business Approach
The end of the moratorium also highlights the importance of companies adopting a more resilient and adaptive approach to economic downturns. The pandemic highlighted the fragility of many business models, and the companies that were resilient were those that were able to adapt quickly to market changes. As the end of the moratorium approaches, companies will need to focus on strengthening their operations, diversifying revenues and planning strategically to avoid insolvency.
Conclusion
The end of the accounting moratorium as of 2025 could mark the beginning of a complex period for thousands of businesses in Spain. While the measure allowed many companies to survive the pandemic, the return to pre-pandemic regulations poses new challenges for those that have not yet managed to clean up their accounts. Key sectors such as hotels and commerce could be the hardest hit, and the forecast of more than 10,000 insolvency proceedings in 2025 is a warning sign that should not be ignored.
Companies and authorities must work together to find solutions that will prevent a massive wave of closures and ultimately contribute to the country’s economic recovery.
