Martinsa’s One Foot In Liquidation

25/11/2014 – Cinco Dias

Property management company Martinsa Fadesa, the face of the real estate bubble which fell into insolvency in summer 2008, is closer and closer to being liquidated, once its new debt restructuring plan was rejected by creditors.

In March 2011, court extended a €7.2 billion payment obligation of Martinsa Fadesa for further 10-years. Officially, it was no bankrupt anymore. At the same time, the real estate firm promised to pay-off at least €3.2 billion owed to twelve entities but it failed to keep the word. Since last year, the 1% of that quote awaits amortization, i.e. €32 million.

Apart from the aforementioned amount, Martinsa Fadesa was supposed to face a 12.5% part of its total debt, €384 million, and sources from the sector hum it will be unable to repay that under no circumstances.

They also suggest the company could dodge the miserable end if it amortized the €32 million. However, it will probably be not able to do that either.

In the last effort to stay afloat, Martinsa went on talks with creditors on covenant change and asset give-in (mostly land), in exchange for debt write-off but the lenders said ‘no’ as it was incompatible with current legistlation.

Few days ago, taking advantage of amendments in insolvency regulations, the firm pursued its new plan called ‘Project Aurora 2’ which would allow it to trim the high indebtness by around €450 million. What is most surprising, the property company wants to keep most of its assets which are jointly valued at €1.4 billion.

In opinion of Martinsa’s main creditors, the proposal is ‘unacceptable’ and ‘inexplicable’ as it suggests the banks shall write-off 80% of the owed amount, take away assets worth a mere 19.5% part of the total, and assume that they will receive the remaining 0.5% within next eight or nine months.

Given such a development, sources close to the entities (i.e. CaixaBank, Banco Popular, Abanca -former Novagalicia-, Morgan Stanley, Royal Bank of Scotland, Sabadell, Unicaja, Liberbank, BBVA, CEISS -Caja España-Duero-, Kutxabank, Bankia and Sareb) say liquidation of Martinsa Fadesa may be an option, unless it presents a better offer.


Original article: Cinco Días

Translation: AURA REE