For the first time since the financial crisis began, major companies are finally feeling its effects. So far this year around 14 companies of medium-to-large size, which employ 30,000 people and have 15 billion euros in debt, have had to enter into pre-bankruptcy agreements in order to extend their debt repayment terms and avoid bankruptcy.
The banks are not handling credit refinancing as before if a business is not clearly viable. The reason is that the Bank of Spain has stiffened its cash provisioning requirements for these businesses.
Surely, keeping the zombie firms alive is not a good solution. This happened in the financial sector, where broad cleanup efforts were paid for by Spanish taxpayers. But the industrial sector should still figure out a way to carry out a broad transformation.
