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Spanish Insolvency Proceedings Drop to Three-Year Low on Economy

Aug. 8 (Bloomberg) -- The number of Spanish companies seeking protection from creditors has fallen to the lowest in three years as the economy recovers and changes to the nation’s bankruptcy rules help heavily-indebted borrowers.

Insolvency proceedings dropped 28 percent to about 4,000 this year, according to the Spanish rating company Axesor. The nation overhauled bankruptcy rules in March to help troubled companies avoid proceedings, known as concurso, and prevent liquidation.

Spain is recovering from the worst slump in its democratic history, with second-quarter growth stronger than forecast and industrial output rising 0.8 percent in June from a year ago. The nation’s borrowing costs fell to a record 2.686 percent when it sold 1.96 billion euros ($2.6 billion) of 10-year bonds yesterday.

The government is trying to save viable companies because about 95 percent of companies that enter concurso end up in liquidation, according to the Madrid-based Colegio de Registradores, which tracks company registrations. A record 8,716 Spanish companies sought creditor protection in 2013, according to a Pricewaterhouse Coopers LLP report.

Wi-Fi hotspots provider Let’s Gowex SA sought creditor protection last month when Jenaro Garcia, the company’s disgraced former chief executive officer, told a Madrid court he had falsified accounts.

To contact the reporter on this story: Katie Linsell in Madrid at klinsell@bloomberg.net

To contact the editors responsible for this story: Shelley Smith at ssmith118@bloomberg.net Michael Shanahan

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