Habitat To Start Negotiating With Investment Banks

2 February 2017 – Expansión

The property developer Habitat is getting ready to grow. The company has convened a General Shareholders’ Meeting on 8 March 2017 to authorise the Board to start negotiating its growth plans with investment banks such as Goldman Sachs, Morgan Stanley and Alantra. Sources in the sector indicate that the property developer is currently working to define its corporate strategy. Habitat faces a phase of expansion after, in 2014, it signed the first major modification to a creditors’ agreement in Spain with a discount of 85% on its debt of €1,200 million.

The company was unable to meet the payment plan established by the agreement that allowed it to file for creditor bankruptcy in 2010 and which saw the following entities become shareholders after they capitalised their debt: Bank of America Merrill Lynch, SP101 Finance Ire-land, Capstone, CCP Credit Acquisition Holdings Luxco, CSCP II, Arvo, Goldman Sachs and Melf. Habitat has promoted housing developments in several of Spain’s major cities since the modification to the agreement was signed.

Original story: Expansión (by G. T.)

Translation: Carmel Drake

Sareb Calls For Changes To Reyal Urbis’s Proposed Agreement

10 March 2015 – Expansión

Negotiations / The real estate company’s main creditor shares the legal concerns raised by the judge regarding the proposed agreement. If they are addressed, a discount of up to 93% could be accepted.

The real estate company Reyal Urbis is using up its last options to save itself from liquidation. The company submitted a proposed agreement on 13 February, which must be approved or rejected by its creditors before next Friday 13 March. Nevertheless, the proposal that has been presented has raised important questions that have lead the judge in charge of the bankruptcy process to reject the offer and ask Reyal for a series of changes and clarifications.

The judge from the Commercial Court number 6 in Madrid is not the only party for whom this proposal to exit the bankruptcy process has raised doubts. Sareb, the main creditor of Reyal Urbis with a debt of €785 million, sent a letter to the court last week expressing its concerns. Last Friday, the judge himself made these concerns clear through a series of requests to the real estate company. One of Sareb’s demands is to know the current value of Reyal Urbis’ assets, through the performance of a new appraisal.

One of the aspects that has generated the most doubt, for both the judge and Sareb, relates to the application of the agreements and waivers to all of the creditors, even those that do not sign up to the agreement. Reyal is making its own interpretation of the recent regulatory changes in the bankruptcy law whereby, if 75% of the creditors adhere to the payment proposal, then rest should waive the mortgage rights they obtained during the four refinancings that the company signed before it filed for bankruptcy. The judge considers that it cannot be assumed that all of the creditors will waive (their rights) or that the “knock-on effect” will apply.

Another controversial point is the high percentage of the discount that Reyal is calling for, which ranges between 88% and 93% for the creditors with syndicated debt (which includes Sareb and entities such as Santander, RBS and Barclays), without offering a credible business plan. In his ruling, the judge demands that (Reyal Urbis) “correct the weaknesses identified in its feasibility plan, in order to provide the necessary and essential objective justification of the discounts requested”.

Reyal has until the end of March to clarify these points and also whether it has a parallel agreement with the Tax Authorities. The real estate company intends to use some of the assets that it does not grant to the creditors (valued at €260 million and chosen by the company) as a guarantee to the Tax Administration.

With the new proposal on the table that resolves the possible uncertainties regarding the distribution of assets, the creditors will consider whether to sign up to the agreement, or conversely, let the real estate company go under, as happened with its counterpart Martinsa Fadesa. Sources close to the creditors believe that the two cases are not the same and that the entities may give Reyal a chance, just like they did with Fernando Martín’s company in 2011.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Judge Asks Reyal Urbis To Rectify Errors In Its Creditors’ Agreement

9 March 2015 – Expansión

The judge at the Commercial Court number 6 in Madrid has ruled that the real estate company Reyal Urbis must present additional documentation and perform “certain rectifications” to the draft agreement that the company presented to exit from its bankruptcy proceedings.

The real estate company, which filed for bankruptcy in February 2011, submitted a payment plan to the court, containing a proposal for the settlement of the €3,978 million debt that it owes.

Reyal Urbis has offered its creditors, which include banks such as Santander, Popular and RBS, as well as Sareb and ICO, a discount of more than 80% on its liabilities and to pay the remaining debt with assets.

The real estate company holds assets amounting to €1,474 million, after it sold several buildings such as the ABC Serrano shopping centre in Madrid. It has just agreed with the tax authorities that it will pay its debt in full, which amounts to around €400 million, but over a long period of time.

The request made by the Commercial Court suspends the period for achieving agreement, which would otherwise have become effective before 13 March.

Martinsa Fadesa

Meanwhile, the Commercial Court in La Coruña has announced the opening of the liquidation phase of Martinsa Fadesa, which owns €6,600 million, after the real estate company failed to obtain support from its creditor banks for a new banking agreement.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

The Banks Reject Martinsa’s Plan And Plunge It Into Liquidation

27 February 2015 – Expansión

The real estate company owned by Fernando Martín has liabilities amounting to €6,600 million.

In 2008, the real estate company Martinsa filed for the largest bankruptcy in Spain’s history.

On Thursday, the creditor banks put a final end to the adventure that Fernando Martín first began back in 2006. Then, the property developer from Valladolid, who appeared in the Forbes list of the richest men in the world, was evaluating the purchase of the Galician company Fadesa, a real estate giant with assets valued at more than €13,000 million located in 13 countries.

The financial institutions plunged Martinsa Fadesa into liquidation, by definitively rejecting the proposed agreement that Martín submitted to Commercial Court number 1 in A Coruña on 30 December, as they considered it to be “unacceptable”, according to comments from various creditor banks. The company has liabilities of €6,600 million, of which €5,500 million relate to financial debt.

In 2008, Martinsa Fadesa filed for Spain’s largest ever creditor bankruptcy, with a debt that amounted to €7,800 million at the time. Although the company reached an agreement to exit from that judicial process, it admitted last year that it was incapable of meeting the obligations of the (revised) agreement for the second year in a row, and it warned of an equity imbalance of €4,473 million. All of that led directly to its liquidation. Following the reform of the bankruptcy laws, Martín presented successive proposals, baptised with the name Aurora Plan, to the creditor banks, to renegotiate the debt. The bank rejected them time and again.

The latest plan, which was presented to the court unilaterally, proposed a 70% reduction to the debt balance and the liquidation of some of the liabilities through deeds in lieu. As a sweetener, Martín included the share of the capital that he thought he would obtain from a potentially favourable sentence in the lawsuit that he had brought against the former owner of Fadesa, Manuel Jove. He filed a claim for €1,576 million against him, on the basis that the sale had gone ahead despite certain irregularities. Martín’s plan involved slimming down the property developer to leave it with a structure of €883 million in assets and €489 million in liabilities.

Financial sources agree that they never accepted any of these conditions: they thought that the discount was excessive, that the assets held overseas were overvalued by 417% and that Martín was going to retain ownership of the best plots of land and properties in the portfolio. In the end, the Supreme Court ruled in favour of Jove and ordered Martín to pay the legal costs, which had risen at least €60 million, an amount the company simply cannot afford to pay.

The negotiations with the banks were led by a group of four banks, comprising Sareb – the bad bank – CaixaBank, Banco Popular and Abanca, which held almost 60% of the financial debt. The entities – altogether the company owes money to around twenty – decided to take control of the real estate company, just like they did with Metrovacesa and Colonial, respectively. Industry sources explained that most of the entities had already made provisions against their loans to Martinsa Fadesa, which filed for bankruptcy in 2008. However Sareb has not, since it acquired the toxic loans from nationalised banks at substantial discounts.

The real estate company, which employs around 70 people, does not have any developments underway. Therefore, in the end, the banks preferred to let the company fail, and for the judge to set in motion the process of orderly liquidation, whereby subjecting the company’s assets to a strict valuation.

Original story: Expansión (by Lluís Pellicer)

Translation: Carmel Drake

Martinsa Has Until Thursday To Convince Its Lender Banks

23 February 2015 – Expansión

Deadline for negotiations / The real estate company has debts of €3,500 million and must reach an agreement with its creditors to avoid liquidation.

Martinsa Fadesa has until Thursday 26 February for its banks to accept the new creditors’ agreement that the real estate company submitted to the judge to deal with its €3,500 million debt and whereby avoid the liquidation of the company.

One of the discrepancies between Martinsa and its creditors is a mismatch of up to 70% in the valuations of its assets. For this reason, entities such as Popular, Caixabank, Abanca and Sareb will not be joining the agreement.

Two weeks ago, the Supreme Court rejected a claim for €1,500 million that the company had filed against the former managers of Fadesa and in doing so further compromised the feasibility of the real estate company controlled and chaired by Fernando Martín.

Moreover, the High Court ordered Martinsa to pay the legal costs (of that trial), which according to financial sources, amounted to €50 million, somewhat higher than the amount for which the company, which lacks liquidity, had make provisions.

On 30 December, Martinsa Fadesa submitted a request to the Commercial Court of La Coruña to reform the creditors agreement that in March 2011 enabled it to avoid the largest bankruptcy in Spanish corporate history. The real estate company has requested a modification to the agreement on the basis that it is impossible for it to meet the debt payment calendar established.

Original story: Expansión

Translation: Carmel Drake

Martinsa Loses Battle With Jove & Fails To Convince Its Banks

12 February 2015 – Expansión

No options left / The Supreme Court dismisses the appeal lodged by the real estate company, which is also failing to reach an agreement with its creditors

The real estate company Martinsa Fadesa received a slap in the face yesterday as the Supreme Court rejected its latest appeal in the legal battle against Fadesa’s former managers, Antonio de la Morena and Manuel Jove.

The Supreme Court was the last legal option for Fernando Martín (pictured above) in his attempt to get Jove and De la Morena to compensate Martinsa with €1,576 million for allegedly falsifying Fadesa’s valuations prior to its purchase by Martinsa in 2007.

Following the rulings against the plaintiff by the Commercial Court, the Provincial Court of La Coruña and now the Supreme Court, the real estate company is left without any legal options. It could request the referral of the case to the Constitutional Court, but that is something that judicial sources deem unlikely.

This failure comes at a very delicate time for the real estate company, just a few days before the period for reaching a new agreement with its creditors comes to an end. In the proposal to its creditors, Martinsa (which has an equity deficit of €4,500 million) had included the possibility of cleaning up the company with the €1,576 million that it hoped to receive from Manuel Jove and share some of the money with its creditors. Now, the company will not only receive that amount, but the judge has order that it cover the legal costs of the trial, which lasted for almost four years. In total, Martina may be forced to pay more than €40 million as a result.

The creditors

In this context, the deadline imposed by the judge in La Coruña for the creditors of the real estate company to join the payment plan will expire on 26 February. The proposed plan includes a significant debt forgiveness clause (“quita”) for some of the more than €6,000 million that it owes.

In addition to sharing out the compensation expected from Jove, the proposal includes a number of other improvements, but they are not sufficient for the creditor banks, which have been trying to reach an agreement with Martín for months.

Amongst the discrepancies between Martinsa and its creditors is a mismatch of up to 70% regarding the valuation of assets. Faced with this situation, the entities, including Popular, CaixaBank, Abanca and Sareb, amongst others, will not sign up to the agreement and so the judge in charge of the case will have no choice but to initiate the company’s liquidation plan. This process will be “long and complex” due to the huge volumes of plots, with a variety of different uses and locations, and the fact that many of them are in very early stages of development.

Original story: Expansión (by R. Ruiz and S. Arancibia)

Translation: Carmel Drake