Martinsa Seeks Relief Through Stipulation to Dodge Liquidation

27/01/2014 – Cinco Días

Martinsa Fadesa has not managed to pay the amount agreed upon with creditors off by the deadline set at the end of 2013. The company signed the settlement with them in 2011 in order to take Martinsa out from the bankruptcy state that time. In spite of the failure in paying, the real estate company assures that it will avoid liquidation backed by a clause included in the agreement.

The company chaired by Fernando Martin informed the CNMV that its administrative board decided on January 13th “to refer to the correction mechanism mentioned in the paragraph (i) of the 3.4. Clause of the Agreement with Creditors, legally approved by the Decision of the Commercial Court of La Coruña, from 11th March 2011, whereby the lack of total payment of yearly amount specified in the Agreement does not imply its non-payment”. The quoted Decision, as the group adds, “has been provided to the Judge of the Commercial Court of La Coruña”.

Martinsa Fadesa filed for the insolvency agreements in July 2008, hardly a year after its establishment as a merger of businesses od Fernando Martin and his managing partner Antonio Martin and Fadesa, a real estate company of Manuel Jove. They fixed the takeover bid at 4.045 million Euros. The company´s quotation on the stock market has been suspended since that time, when the  company´s shares were sold for €7.30. Martinsa´s  bankruptcy is the largest that has ever happened in Spain in regard to huge debt declared (7.000 million Euros).

In the agreement the company pledged remitting its debt within 8 years, starting from 2008. The pact also mentions converting 15% of the ordinary credit to equity loan and that amortization in the first three consecutive years (2012-2014) will be set between 0.25% and 0.5% of the total liabilities. Moreover, it considers possibility that the banks could swap the assets for debt in case when the real estate company failes to pay its debt within the maximum of 10 year-period.

Source: Cinco Días