20 April 2015 – Expansión
Madrid / The hotel, which continues to be operational, filed for voluntary bankruptcy at the beginning of this year in order to renegotiate its debt.
Leading Hospitality, the company controlled by the businessman César Losada, which owns the Holiday Inn Madrid Bernabéu hotel and the Hotel Maza in Zaragoza, has filed for bankruptcy to try to restructure its debt and forge ahead (with its business). On 13 January, Leading Hospitality voluntarily adopted this legal status and almost a month later, Commercial Court no. 9 in Madrid declared the procedure open, according to the company’s annual report for the financial year 2014.
Gregorio de la Morena, managing partner at DLM Insolvia, has been appointed as the bankruptcy administrator, although Losada and his team continue to manage the hotel, which is still operational. Sources close to Losada explain that the company filed for bankruptcy because “it had cash flow problems, which prevented it from meeting its short-term debt commitments”. Nevertheless, the intention is that the company will avoid filing for liquidation and instead reach an agreement with its creditors and continue operating.
For the time being, the company is waiting for the bankruptcy administrator to prepare the list of creditors to start negotiations. In addition, Leading Hospitality expects to file a collective dismissal plan (‘expediente de regulación de empleo’ or ERE) to reduce its wage bill – the scope of (that agreement) is being negotiated with the bankruptcy administrators. The hotel employs around 150 people.
In 2013, Leading Hospitality recorded revenues of €7.33 million, but it generated a negative operating profit of -€2.32 million. Net losses reached -€1.92 million and last year, the company also ended the year in the red.
At the end of 2013, the company had long-term debt amounting to €7.62 million and short-term debt amounting to €1.55 million, as well as several mortgage loans on both of its hotels – with Bankinter over its property in Madrid. Staff salaries and compensation payments amounted to €4.17 million in 2013.
In the accounts for that year, approved in December 2014, the auditor warned that the company was experiencing on-going cash flow problems (to be able to afford to pay) its employees, suppliers and financial partners. And it pointed to the management team’s plan to continue the refurbishment of the hotel, which it says is worth €27 million, and reduce the number of staff.
At the end of 2012, the businessman César Losada became the majority shareholder in the Madrid hotel, after acquiring a 51% stake from the InterContinental Hotel Group (IHG). Losada, who is behind the hotel investment company Losan Hotels World, invested €22 million in the acquisition and refurbishment of the four star hotel, which has 313 rooms. The asset is also owned by other individual shareholders and Losada intends to acquire their respective stakes (over time). Following the change of ownership in 2012, the hotel retained the Holiday Inn brand, which is owned by IHG, though a 25 year franchise contract. In 2013, Leading Hospitality paid a €363,754 fee to IHG.
Original story: Expansión (by Yovanna Blanco)
Translation: Carmel Drake