Silken Hotels’ Owner Files For Bankruptcy With €400m Debt

11 February 2015 – Cinco Días

The British investment fund Carey lobbied for Urvasco to file for bankruptcy

Urvasco has suffered from financial imbalances for years. When the financial crisis hit, the company held substantial investments in its hotel and property development businesses. To try and solve its problems, it has sold assets ranging from wind turbines to works of art, but has not managed to balance its books. Finally, this month, Commercial Court No. 1 of Vitoria has issued an order for the bankruptcy of the group owned by the businessman Antón Iráculis, which has liabilities of more than €400 million.

Carey Value Added has lobbied for this process, according to the judgement issued by the magistrate María Teresa Trinidad. The British fund was a partner of Urvasco when they launched a hotel together in London; the project failed.

As a result of that failed investment, Carey was left with a debt of €68.9 million, which was recognised by the High Court in London in April 2013. In 2008, Urvasco did not obtain financing for the construction of the hotel in the English capital because the financial institutions realised that it did not meet the required solvency levels; this damaged Carey, which had already financed some of the investment in advance.

The British investment fund requested the recognition and enforcement of that foreign resolution in Spain. That resulted in a long dispute between both parties, which ended in the Commercial Court No. 1 of Vitoria. In her sentence, the magistrate María Teresa Trinidad stated that Carey “has proven the general non-payment of overdue obligations”, by both the Grupo Urvasco (UG), as well as by its subsidiary Grupo Hotelero Urvasco (GHU), which is 93.25% owned.

The magistrate also added that the debt of €68.9 million was recognised in GHU’s accounts at the end of 2013. This stake is managed by the hotel chain Silken, which includes 32 establishments, according to information gathered from the company’s website. The best known are the Puerta América in Madrid and the Dómine in Bilbao; the latter is located opposite the Guggenheim Museum. They also own the Ciudad de Vitoria in the Álavan capital.

In addition to its hotel business, Grupo Urvasco is one of the leading property developers in Spain, although its shares are not publicly traded. In Bilbao, it constructed the Torres Isozaki, which house almost two hundred homes along the Nervion River.

Urvasco has 20 days to file an appeal with the Provincial Court of Álava against its insolvency. Sources close to the process take it as a given that the company owned by Anton Iráculis will resort to this action, since it previously fought “hard” against Carey’s debt to classify it as “not overdue and under judgement” (pending judicial review).

A significant part of the Basque group’s liability is a syndicated loan amounting to €152 million with a syndicate of financial institutions, including BBVA, Banco Popular, EBN and CaixaBank.

The total debt balances will be disclosed over time, when the bankruptcy administrator, the company Sindicatura, collects all of the information. The creditors have one month to communicate the Grupo Urvasco’s non-payments and close its consolidated liabilities.

Original story: Cinco Días (by J. Vadillo/L. Salces)

Translation: Carmel Drake