Reyal Urbis’ Liquidation Process Begins

6 September 2017 – Expansión

Three months after receiving the “No” decision from its creditors to its payment proposal, the real estate company Reyal Urbis is starting its liquidation process, with Sareb, the Tax Authority and several banks, such as Santander, as the main beneficiaries.

On Monday, the property developer controlled by Rafael Santamaría received the ruling from Mercantile Court number six in Madrid, ordering the launch of the liquidation phase. In this way, Reyal Urbis will star in the second largest bankruptcy in Spain’s history, with debt amounting to more than €3,500 million, exceeded only by that of Martinsa Fadesa.

This new phase will be led by the bankruptcy administrator, given that the judge is continuing to suspend the managers of the company and has ordered the termination of its corporate governance bodies.

Since its appointment as the bankruptcy administrator in February 2013, the audit firm DBO has taken care of the company’s legal proceedings. It was responsible for submitting the payment proposal prepared by the company for its creditors, which included discounts of more than 90% on its liabilities. Only 32.7% of its shareholders supported that payment plan in June, which effectively condemned the company to extinction.

Now, the administrations will have to determine the best solution for the creditors, which are owed around €3,600 million, according to the most recent figures presented, whilst the company owns assets worth €1,170 million as at 31 December 2016.

Portfolio

The company’s assets include €188 million corresponding to properties that generate rental income and €863 million relating to around 200 finished homes and land. Specifically, Reyal Urbis owns one of the largest land portfolios in Spain, with 6.7 million m2, exceeding the large property developers such as Metrovacesa (6 million) and Neinor Homes (1.3 million).

Distributed over more than 30 cities in Spain and Portugal (the company owns assets in Lisbon and Porto), the portfolio of land and rental assets, such as the best-located hotels in the Rafael Hoteles chain, as well as its stake in the Castellana 200 retail and office complex, will be the jewels in the crown to be shared out amongst the creditors or sold to allow them to recover at least some of their investment, according to sources close to the process.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Reyal Urbis Files For Spain’s Second Largest Bankruptcy

21 June 2017 – Cinco Días

The long-awaited death of Reyal Urbis is approaching. The real estate company has failed to convince a majority of its creditors to accept the proposed agreement presented by the entity chaired by Rafael Santamaría, which included significant discounts of between 80% and 90% of a total debt balance amounting to €4,600 million. It is the second largest liquidation ever in history, following that of the property developer Martinsa-Fadesa, which folded with a debt of around €7,000 million.

The proposed agreement presented by the company has not received sufficient backing given that in the case of the ordinary debt, it only obtained favourable votes from 32.7% of the creditors; another 37.79% voted against the proposal and the remaining 29% abstained, according to legal sources. In the case of the syndicated loan, the votes did not reach the 75% threshold either.

The bankruptcy administrator, namely, the audit firm BDO, is obliged to communicate the result of the vote that takes place in Commercial Court number 6 in Madrid, where the judge will issue the proposed liquidation ruling, with an equity black hole of €3,436 million.

The liquidation of Reyal Urbis was finalised after its major creditors, including Sareb and the opportunistic funds that had acquired some of the liabilities in recent weeks, rejected the proposed agreement, as disclosed by Cinco Días at the end of May.

The company has liabilities worth more than €3,200 million corresponding to a syndicated loan, in which Sareb holds a crucial stake, with more than €1,000 million proceeding from loans from the former savings banks. In addition, Reyal Urbis owed almost €900 million in ordinary debt and more than €400 million to the Tax Authorities. In fact, the real estate company is the largest debtor on the list of overdue debtors published by the Tax Authorities.

The property developer is dying just a decade after its merger which saw it become one of the large real estate companies in the country, together with Martinsa-Fadesa, Colonial and Astroc. Its President, Rafael Santamaría, a technical architect by training, has spent his whole life working for the family business. He was appointed CEO in 1985 and took over from his father as President in 1997. In 2006, he starred in one of the largest deals in the sector, after acquiring Urbis from Banesto for €3,300 million.

But that joy was short-lived. The burst of the real estate bubble dragged him down, just like it did Martinsa, Habitat and Nozar. The company filed for voluntary creditors’ bankruptcy in February 2013 after Sareb, BBVA and Santander refused to refinance its debt.

Santamaría’s last ditch attempt to save the company came with an aggressive liquidation proposal. That plan included discounts of 90% on the ordinary loans. In the case of the syndicated loan, the offer included the “dación en pago” of assets, which would have meant accepting discounts of around 80%. In turn, the Tax Authorities negotiated a unilateral payment plan for the €400 million owed.

That aggressive plan did not seduce the creditors, who have seen the possibility of recovering their capital go up in smoke, choosing instead the option of liquidating the company’s remaining assets, which are currently worth almost €1,200 million.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake