SVP Global Buys Defaulted Mortgage Associated With In Tempo Skyscraper

7 November 2017 – Expansión

The investment fund SVP Global has reached an agreement with Sareb to buy the defaulted debt associated with the In Tempo skyscraper, the largest residential building in Benidorm. According to financial sources consulted, SVP Global has purchased a package of debt worth around €110 million, secured by the second tallest residential property in the EU, whose property developer, Olga Urbana, has filed for creditors’ bankruptcy.

It is one of the largest debt operations associated with a single real estate asset in Spain. SVP Global is a fund specialising in this type of operation and has around $6,900 million under management through its various vehicles. The In Tempo building is an unfinished project (although more than 90% of the construction work has been completed) measuring 192m tall and containing 47 floors for residential use.

The construction of In Tempo has given rise to a long-standing legal dispute. After launching the development of the tallest residential property in Europe in 2006, its property developer Olga Urbana had planned to finish the work in the middle of 2009. But, with the outbreak of the real estate crisis, the building work ended up being subjected to continuous delays and obstacles due to problems with the construction companies and suppliers. Although the construction work continued, in a fashion, under the control of Caixa Galicia, which financed the development with a €100 million loan, the financial crisis put an end to the construction work, which was never finished.

In 2012, the loan from the former savings back was transferred to Sareb, which at the end of 2014 and in the absence of an agreement between Olga Urbana’s shareholders, decided to enforce the creditors’ bankruptcy, with a total debt of €137 million. As part of that process, the judge approved the auction of the almost-finished building with a value of just over €90 million. Nevertheless, the offers were very low and so Sareb decided to exercise its preferential right to take ownership of the property.

Original story: Expansión (by C. Morán and A. C. Álvarez)

Translation: Carmel Drake

In Tempo: Bankruptcy Administrator Rules In Favour Of Sareb

17 January 2017 – El Mundo

The bankruptcy administrator of Olga Urbana, the property developer of the In Tempo skyscraper in Benidorm, whose future is being decided by the courts, is clear in its findings: neither Abanca (previously Caixa Galicia) nor Sareb (the bad bank) were administrators of the bankrupt company and therefore, neither of them were responsible for the management that led the company to suspend its payments after it accumulated debt amounting to €137 million.

In this way, the position of the bankruptcy administrator, Antonia Magdaleno, who has presented her conclusions about the In Tempo case before the Mercantile Court of Alicante, which is instructing the process, represents a lifeline for the interests of Olga Urbana’s major creditors, above all for Sareb, which is hoping to repossess the property and subsequently sell it to recover some of its debt, which amounts to around €107 million.

Magdaleno considers…that Sareb’s debt should be ranked as special privilege, which would place it at the front of the queue when it comes to receiving proceeds once the building is sold. By contrast, the small creditors, who initiated this bankruptcy proceeding, maintain that Abanca and Sareb did act as administrators of In Tempo’s developer, and therefore that their loans should be considered as subordinated, which would force them to the back of the queue when it comes to receiving any proceeds, whereby allowing the other creditors to recover their loans first.

Magdaleno reminded the Court that construction of In Tempo, the tallest residential skyscraper in Spain, was suspended in 2010 by which point Olga Urbana had used up the entire loan – amounting to €90 million – granted to it by Abanca, something which the small creditors deny. This group of creditors (the construction company Kono, Isidro Bononat – a shareholder of Olga Urbana – and the architect Roberto Pérez Guerras) say that Magdaleno’s investigations have not been independent. (…).

Sareb, which took over the loan that Abanca had previously granted to Olga Urbana, maintains its claim against the Attorney General’s office in which it accuses Olga Urbana of “alleged diversion of funds and company links between owners and administrators of the company and some of their own contractors and suppliers”. The entity calculates that €23 million was diverted.

Similarly, the bankruptcy administrator argues that the fact that Sareb requested the necessary bankruptcy of Olga Urbana “does not represent another example of the bad bank’s involvement in the administration of the business, but rather represents a standard option open to all creditors when a Board of Directors is not fulfilling its duties”. Magdaleno is categorical in this respect. “There is no proof whatsoever that allows us to conclude that first Abanca and subsequently Sareb, carried out any functions akin to those of a real company administrator”. The judge will have the final word.

Original story: El Mundo (by F.D.G.)

Translation: Carmel Drake

Sareb & Olga Urbana’s Small Creditors Await “In Tempo” Court Ruling

2 December 2016 – El Mundo

The small creditors of Olga Urbana, the bankrupt property developer responsible for the In Tempo skyscraper in Benidorm, are continuing their battle with Sareb regarding the future of the controversial building.

As the company’s main creditor, the bad bank is looking to be awarded ownership of the iconic block and whereby recover some of the €100 million that it is owed by the development company; meanwhile, a group of creditors, comprising the construction company Kono; the former administrator of the bankrupt company, Isidro Bononat; the architect Robert Pérez Guerras, and the owners of one of the homes sold, Laura and María Pelayo, are trying to stop Sareb’s plans and avoid the entity from being first in line to collect its debt, given that such an arrangement would prevent them (and all of the other creditors) from recovering any funds.

Their objective is to force Sareb to get to be back of the queue when it comes to collecting its debt, given that the company was the administrator of Olga Urbana, and therefore, all of the business management duties lay with the bad bank.

Commercial Court number one in Alicante, which is instructing Olga Urbana’s bankruptcy proceedings, will have to take the final decision in this regard.

If the judge considers that Sareb was the administrator of Olga Urbana, then its loan will be classified as subordinated in the bankruptcy ranking, and therefore, Sareb would be one of the last entities to recover its funds. Furthermore, it would not be allowed to foreclose the property via the fast track, and so the small creditors would be able to recover their debts first; however, if the judge ends up ruling that Sareb was not the administrator of Olga Urbana, then the bad bank would have free rein to hold onto In Tempo (which has an appraisal value of €90 million), sell it and offset some of the liabilities that are currently weighing it down.

The conflict is now only pending the final ruling. The hearing was held at the end of October and the parties have presented their findings.

The small creditors insist that since the end of 2009, the construction work was supervised and led by Caixa Galicia (subsequently called Abanca) and then by Sareb (December 2012), when it took on a loan amounting to €103 million that Abanca had granted to Olga Urbana to build the tallest residential tower in Spain.

In parallel, Sareb has filed a claim against the Public Prosecutor’s Office regarding the existence of alleged irregularities in the management of Olga Urbana, citing that “economic harm” has been caused amounting to €23 million.

Sareb argues that, amongst the irregularities identified, it has found “alleged diversion of funds and company links between the owners and administrators of Olga Urbana and some of its own contractors and suppliers. (…).

Original story: El Mundo (by F. D. G.)

Translation: Carmel Drake

Judge Approves Liquidation Plan For Olga Urbana

15 December 2015 – Valencia Plaza

Commercial court number 1 in Alicante has approved the liquidation plan for the developer of the In Tempo building in Benidorm, the tallest residential skyscraper in Europe, construction of which began in 2006. Olga Urbana is the construction company behind this unfinished building, which has now been put up for sale. The company has filed for bankruptcy and Antonia Magdaleno has been appointed as the bankruptcy administrator.

The company that constructed the building filed for bankruptcy after its main creditor, Sareb, which inherited the loan originally granted by Caixa Galicia amounting to just over €100 million, requested legal intervention in the company. According to the court order, Sareb proposes that the direct sales phase last for at least five months.

In addition, if during the first three months of this phase, an offer is received to directly purchase the building for a price equivalent to at least 70% of its appraisal value, then Sareb asks that it be awarded to the bidder without waiting for the five month period to end. Nevertheless, the sale must involve the property in its entirety; offers will not be accepted for individual homes.

Original story: Valencia Plaza (by Estefanía Pastor)

Translation: Carmel Drake