The Owner of Santander’s HQ is Set to Emerge from Bankruptcy

26 January 2018 – Voz Pópuli

There is light at the end of the tunnel in the creditor bankruptcy of Marme Inversiones 2007, the company that owns Banco Santander’s Ciudad Financiera (in Madrid). This week, a key meeting was held to unblock the bankruptcy proceedings, with deliberation over several appeals, something that the courts will come to a decision about over the coming weeks.

The parties potentially interested in this process have started to take positions regarding the possible sale of the Ciudad Financiera, which could happen in the middle of this year. The best-positioned player is the fund AGC Equity Partners, with a proposal that values that bank’s headquarters at between €2.7 billion and €2.8 billion, as this newspaper revealed.

But two competitors have emerged: a consortium formed by Madison Capital, Glenn Maud and GCA; and a proposal from the Iranian-born financier, Robert Tchenguiz, according to financial sources consulted by Vozpópuli.

The offer that most concerns AGC is the one presented by the US funds (Madison and GCA) and the British property magnate Glenn Maud, who was one of the original buyers in 2008. The price that they may put on the table is close to the figure being offered by the Arab fund, around €2.7 billion.

Months of advantage

Nevertheless, AGC is the favourite in the race because it has been negotiating the operation with Santander for several months. Santander is not only the tenant in this case, it also holds a small part of the debt and a right of first refusal. Having said that, the Commercial Court number 9 of Madrid has denied that preferential right until now. Be that as it may, an agreement with Santander would facilitate everything.

Meanwhile, in addition to these two offers, further competition has emerged in the form of Tchenguiz, owner of the company Edgeworth Capital. The Iranian national has been trying to harness his investment in subordinated debt for years. By holding one of the riskiest tranches, he has to make sure that the liquidation plan protects him, otherwise, he will be exposed to discounts. That negative scenario would become a reality with AGC’s liquidation plan.

For this reason, Tchenguiz is offering an insolvency exit plan in which he would become the owner of the Ciudad Financiera by purchasing the stake owned by Glenn Maud.

To complete the picture, we should take into account that beyond the bankruptcy of Marme Inversiones, two other companies in Spain are involved in this insolvency: its two parent companies, Delma and Ramblas. And that those creditors and investors are awaiting trials in the UK and The Netherlands. This complex legal battle is starting to see the light at the end of the tunnel.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Ayco Plans To Raise Up To €100M Through A Capital Increase

21 November 2017 – Expansión

The property developer Ayco plans to carry out a capital increase amounting to between €50 million and €100 million to allow new investors to acquire shares and to accelerate its business plan for the next few years. “We would like to carry out this capital increase, which has been authorised by the General Shareholders’ Meeting, at some point in 2018. For us, it will represent our definitive return to the market”, explained the firm’s President and CEO, Francisco García Beato.

Ayco is the oldest listed real estate company in Spain. The property developer, founded in 1941, with the name Inmobiliaria Alcázar and in which the Valencian businessman Onofre Miguel held a stake at the time, was one of the many victims of the real estate crisis that took hold in 2007. The property developer went on to complete a restructuring process, involving the transfer of some of its assets to Sareb at the end of 2014, and several months later, it welcomed the entry of new investors, including Alpha Moonlight, amongst others.

“After successfully completing the restructuring process, the company, which is currently listed on the “open outcry market”, is the ideal vehicle for investors looking for transparency, governance and to make their investments liquid through the stock market”, added García.

Ayco, which has own funds amounting to €8 million and a market capitalisation of €26 million, is currently working on a property development project in Palma de Mallorca, involving the construction of 24 homes on independent plots. It also owns a plot measuring 25,733 m2 between the municipalities of Gibraltar and La Línea de la Concepción, where it is building a four-star hotel with 250 rooms.

Hotel Byblos

In addition, last year, Ayco purchased Hotel Byblos (in Mijas), one of the most iconic establishments on the Costa del Sol in its heydey, for €9.75 million. This hotel, which has been closed for six years, used to be owned by the property developer Aifos, which filed for insolvency in 2009. Following a comprehensive renovation, the company plans to reopen the hotel – which will have 288 rooms, of which 65 will be newly built luxury suites – in the summer of 2019.

To this end, the firm is currently holding negotiations with hotel operators interested in participating in the project, from both a management and financing perspective. “Having a significant volume of resources tied up in a single asset has an opportunity cost. The ideal scenario would be for us to identify an operational and financial partner that would allow us to retain control and in turn participate in the generation of value for the project”.

García revealed that Ayco is negotiating with one international chain that does not currently have a presence in Spain and one Spanish hotel operator. In both cases, the partners work with real estate investors.

Ayco also owns land with a buildable surface area of 85,000 m2 in Málaga, Sevilla and Cádiz, where it plans to build around 800 homes. Moreover, it is evaluating operations to buy plots for the construction of another 1,000 homes in Andalucía, the Balearic Islands, Madrid and the north of Spain. Specifically, it plans to spend €15 million on the execution of those purchase opportunities.

The company will close 2017 with a turnover of around €5 million and a net profit of €500,000. It expects to generate earnings of €10 million in 2018 and of up to €24 million in 2022.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Europe’s Finance Ministers Consider Creating An EU Bad Bank

4 April 2017 – Expansión

According to working documents to which Efe has had access, the European Union’s (EU) Economic and Finance Ministers will meet on Friday to discuss the possibility of creating a bad bank in order to offload the non-performing loans accumulated by European banks in the market.

The text, drawn up by Malta in its role as the current Presidency of the EU, will serve as a basis for reflecting on the actions that may be adopted at the EU level, to reduce the burden of non-performing loans on European entities, during an informal meeting of the ministers in Malta.

These non-recoverable loans account for 5.4% of the total loan portfolio and are worth more than €1 billion (equivalent to more than 7% of the EU’s GDP).

In addition to the creation of an asset management company, widely known as a bad bank, consideration will also be given to the option of creating a secondary market in the EU for these types of loans, to improve supervision, strengthen insolvency regimes and tackle the accumulation of pending court cases.

“Experience suggests that the creation of asset management companies can help to tackle the accumulation of non-performing loans (NPL) regardless of their capital structure (public, private or mixed)”, said the document.

The Maltese Presidency highlighted that the establishment of this company “would very likely” represent a boost to the secondary market for these assets, by creating a transaction history, and at the same time, grouping together these loans would reduce the information gap between buyers and sellers and would facilitate access to the market for smaller banks.

Nevertheless, the Presidency explained that in the past, there have been cases in which these bad banks have served only as a “cushion for removing NPLs from the banks’ balance sheets” and that there have only been “limited sales” in the market.

As a result, it advocates a hypothetical bad bank that fulfils certain “success factors”, such as suitable governance agreements and proactive strategies to maximise the value of its portfolio.

The current EU Presidency considers that this measure should be accompanied by a “substantial boost” in investment in impaired assets in the EU, by private and public investors alike.

In this sense, it underlines that the creation of this company should be executed “in line” with EU rules regarding bank resolution and State aid.

Meanwhile, the Economic and Finance Ministers will analyse the options for boosting a secondary market in which these loans could be offloaded, which is currently being hampered by a lack of reliable information about the quality of the assets and differences in information between sellers and buyers.

In this sense, it opens the door to the creation of “state-sponsored” platforms for transactions involving non-performing loans.

Original story: Expansión

Translation: Carmel Drake

Reyal Urbis To Appeal Judge’s Latest Ruling

28 September 2015 – El Economista

Reyal Urbis is just one step away from liquidation after Commercial Court Nº 6 in Madrid dismissed the real estate company’s proposed agreement to exit from bankruptcy, which it filed for more than two years ago.

On Friday, the company announced that it will lodge an appeal against the ruling made by the judge Francisco Javier Vaquer and will request the suspension of the effects arising from it, until the appeal has been settled.

The previous intervention by the judge took place on 6 March, when he asked Reyal Urbis, which has bankruptcy debt amounting to €4,236 million, to remedy some of the errors identified in its proposal. Specifically, the judge demanded a “necessary and essential objective justification” of the proposed discounts and settlements.

The real estate company, led by Rafael Santamaría (pictured above), proposed two payment alternatives for its primary creditors. Under the first, the loans would have a discount of 90% and the remaining 10% would be paid through the transfer of assets in lieu of payment. The batches would be awarded to the entities by drawing lots, a process that Reyal confirmed was conducted in the presence of a notary on 10 February. The second option for these loans consists of applying discounts of between 88% and 93%, on the basis of the syndicated loan tranches, and then deferring the loan repayments for 6 years, with a further 4 years of interest-only payments.

The judge also asked that the “drag effect” be eliminated, since Reyal was planning to extend the effects of the agreement to any dissident creditors, if approval was obtained from 75% of them. According to sources close to the process, this would mean that creditors with joint mortgages would lose their privileged position, since the current law does not provide for this effect, and so it would only be possible if the creditors voluntarily relinquished their rights.

Insolvent until 2023

According to the bill that the Economista has had access to, these matters have not been remedied by the company. Moreover, the judge ruled that the restructuring proposed by the real estate company is “clearly detrimental to the rights of the creditors” and does not guarantee the viability of Reyal. Thus, the real estate company will record “negative equity until the end of 2023 for amounts exceeding €90 million, and the plan does not set out how to eliminate this cause of company dissolution from a situation of insolvency”.

Original story: El Economista (by Alba Brualla and Lourdes Miyar)

Translation: Carmel Drake

Amendment To Insolvency Law Creates “Bonkers Rule”

24 April 2015 – Expansión

The latest amendment to the Spanish Insolvency Act (Royal Decree-Law 11/2014, dated 5 September) has totally changed the rules of the game for investors in distressed debt.

Although it has gone relatively unnoticed amongst other novelties that have grabbed the attention of scholars (such the new cram-down majorities or the special provisions in the transmission of business units), the new rule to calculate the value of securities over the assets of insolvent companies is of great importance for the debt business.

Pursuant to this new rule, securities (basically mortgages and pledges) will no longer cover the initially agreed amounts in insolvency proceedings in those cases in which the receiver’s report had not been issued when the reform entered into force. The “privileged credit” is now capped at the (current) fair value of the collaterals, reduced by 10% to cover foreclosure expenses, minus the amount of any higher-ranking debt.

The new rule, without clear precedents in the main jurisdictions of our legal environment, has been received in some cases with suspicion and in others with shock by top foreign firms with ambitious investment projects in distressed debt. Especially by private equity funds and investment banks having set their sights on portfolios of secured debt owned by financial entities that need to “clean up” their balance sheets and reduce their exposure to the real estate sector (eg. Sareb); transactions that generally have a strong insolvency component. It is also a disincentive for the players of the incipient “direct lending” industry, the most genuine expression of the “shadow banking” phenomenon. These players are thus pushed to request additional guarantees or higher interest rates for refinancing (in a sector with a high cost of capital per se). With financial models ready and binding offers filed, such last-minute surprises are not welcome by potential new lenders. Certain City executives have baptized the amendment as the “bonkers rule” (“regla de locos”), and expressed their wishes for the Government to stop moving the goalposts during the game. As Ignacio Tirado ironized in Expansión (“Trotski y la reforma concursal”, 13 November 2014), it looks like there is a Trotskyist hiding among the Government’s ranks, because of the “permanent revolution” theory being applied to the Insolvency Act.

Leaving the pure economics and irony aside, it is shocking from a legal standpoint that a cornerstone of real estate law such as mortgage liability (with Registry publicity versus third parties) loses all effectiveness upon the filing for insolvency. We are aware that Insolvency Law is a law of exception, which requires a balancing of interests, but we do not believe that choking half a dozen basic tenets of mortgage law for the sake of the utopian “par conditio creditorum” principle (“all creditors should be treated equal”) contributes to enhance payment to creditors, or the continuity of the debtors’ business. On the contrary, it impairs the legitimate expectations of creditors to protect their claims, it contravenes the basic rules of legal certainty (Article 9.3 of the Spanish Constitution) and creates instability by giving rise to interpretative and transitory right issues.

The constant amendments to the Insolvency Law (two on average per year from its entry into force on 1 September 2004), including material changes such as the one we have analyzed, give an image of a fluctuating legal system, always a step behind economic reality, driven by the unchanged and stubborn percentage of companies that end in liquidation. No one has thought that the key could be to facilitate their recapitalization; not to put spokes in the wheels of investors.

Royal Decree-Law 11/2014, together with the so-called “second opportunity law”; RDL 1/2015, are being processed as new draft bills (“proyectos de ley”), so they are subject to new amendments. Maybe it would be a good idea to listen to the market and that legal certainty prevails over a questionable “insolvency justice”. Especially when two core objectives for economic recovery are at stake: attracting foreign capital and cleaning up banks’ balance sheets.

Original story: Expansión (by Antonio García García)

Translation: Dentons

Bami Newco Files For Voluntary Liquidation

30 January 2015 – Inmodiario

Bami Newco, the real estate company controlled by Joaquín Rivero, which filed for bankruptcy in mid-2013, has now filed for liquidation, according to a ruling issued by the Commercial Court number 2 in Madrid. The company, which has debts of €652 million, proposed its liquidation under the Bankruptcy Law, after it was unable to reach a refinancing agreement with its lender banks.

Bami holds assets amounting to €726 million to meet its liabilities, according to a report published by the insolvency administrator in mid-2014.

The company was founded in 2007 after exiting Metrovacesa’s share capital, a real estate company in which Bami become the controlling shareholder following the takeover it launched in 2004.

The new real estate company voluntarily filed for bankruptcy after, at the end of 2012, Rivero and the Soler family also declared bankrupt the companies through which they channelled the stakes (16.6% and 15.6%, respectively) they then held in the French real estate company Gecina. In 2013, they sold the debt linked to those investments, which were guaranteed by Gecina’s own shares, to the funds Blackstone and Ivanhoé Cambridge.

The company voluntarily filed for bankruptcy after failing to reach a long-term refinancing agreement with its bank syndicate that would have given it the financial stability necessary to continue its activity.

The company has a portfolio of office buildings located in the North of Madrid, totalling 127,500 square metres, with an average occupancy rate of 90%, backed by long-term contracts with highly solvent clients, including several Ibex 35 companies. Moreover, the company had plans to construct two buildings in the “Adequa” business park, which would have resulted in an additional 27,000 sqm.

Bami closed 2012 with a loss of €15 million, as a result of the cancelation of its derivative hedges and the impairment loss it recorded on buildings that had not yet become operational.

Despite having paid the interest on its debt on a timely basis since its constitution, and although most of its debts were due to mature this year, the real estate company decided that filing for bankruptcy was essential, since without long-term, stable financing, the business will be unable to develop its property portfolio and carry out its projects.

Original story: Inmodiario

Translation: Carmel Drake

No Agreement Between Martinsa & Lenders, Liquidation Looms

18/12/2014 – Expansion

Talks between Martinsa Fadesa and its creditors are finishing with quite bad prospects for the real estate company. According to sources with knowledge of the negotiations, uncompromising position of the firm’s chairman is hindering the agreement.

Before December 31, Martinsa must pay-off 23% of its financial debt, currently amounting to 3.5 billion euros. If not defrayed, the company will inevitably be dissolved.

Since the very first moment, the group of creditors led by main lenders Sareb, Popular and CaixaBank were in favor of negotiations and even an 80% forgiveness.

However, in exchange, the entites asked for shares in management of the company and debt-for-equity swaps, opening them the door to Martinsa’s capital.

Fernando Martin (pictured) has rejected the move and moreover, he is claiming a new credit line assuming much more attractive conditions than those ruling the market (at a 1% interest rate). The fresh capital injection would serve to repay 700 million debt to the creditors and the Treasury.

Facing such a set of terms and conditions, banks started to study possible liquidation of the property manager that enjoyed success in 2006 after buying-out Fadesa for more than 4 billion euros.

New Bankruptcy Law

In November, Martinsa announced it would include the new regulation on insolvency which allows the firms in financial troubles to review creditors’ meeting and talk on relaxing the conditions. In 2011, when Martinsa managed to crawl out from the biggest bankruptcy process in Spain, it promised to pay 100% of the debt within 10 years.

Deficit of Martinsa Fadesa reached 4.51 billion euros. What makes its situation worse, during the nine months from January to September, the company lost more than 200 million euros. As of December 31, its assets represent a worth of 2.9 billion euros.


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

Translation: AURA REE

Bankruptcy Order For Developer of In Tempo Tower

17/12/2014 – 20 Minutos

The Mercantile Court nº1 in Alicante has made a bankruptcy order for developer Olga Urbana S.L., responsible for construction of the In Tempo building in Benidorm (Alicante). Spain’s bad bank, Sareb, filed for the lawsuit in November.

According to Wednesday update of the Official Gazette (Boletín Oficial del Estado, BOE), the indictment, dated December 1st, suspends the debtors’ rights for administration and decision-making, and assigns lawyer Antonia Magdaleno to the Official Receiver role. Moreover, it gives a month for creditors to submit their credit statements.

As of 31st December 2012, by court order, Sareb acquired debt of Olga Urbana from NCG Banco. The credit was granted for construction of the skyscraper, at that time 93% completed and set to be finished in March-April 2013.

Olga Urbana owes around 100 million euros to the bad bank. Seeing serious financial troubles of the developer, Sareb decided to bankrupt the firm.

As the bad bank justified, the step was taken to ensure orderly valuation of the real estate of the company, as well as its viability, and above all the viability of the In Tempo project itself.

In the view of Sareb, only making a bankruptcy order will allow better income and expense control and protection of the rights of creditors, homebuyers and providers.


Original story: 20 Minutos

Translation: AURA REE

Real Estate Companies Hope For Renewal of Their Life-Saving Law

16/12/2014 – Cinco Dias

Spanish real estate industry hopes that the Royal Decree-Law 10/2008 will be prolonged for at least one year more. Otherwise, we could witness ‘an haemorrhage’, as the new chairman of property developers association of Madrid (Asprima), Juan Antonio Gomez-Pintado, put it. His Barcelona counterpart from corresponding group Apce, Marc Torrent added that ‘a year of being in force is an absolute minimum’.

In 2008, the Government of Jose Luis Rodriguez Zapatero approved the Royal Decree as a preventive measure against massive losses of property managers triggered by value drop-off. ‘Impairment losses deriving from Tangible Fixed Assets, Real Estate Investments and related Stocks, Payables or Receivables shall not be recognized in annual corporate reporting’, the regulation states.

Disappearance of the law would have impacts on the article 27 of the consolidated text of the Corporate Law, as well as on the Bankruptcy Law 22/2003 from July 9th.

The regulation mentioned above indicates that if the losses take the equity down to below two-thirds of the social capital (for limited companies) and if during a year the firm does not recover, it must cut in the equity by necessary amount. The article 363.1. applies to all kinds of companies when the net worth posts below 50% of the share capital, which would mean either dissolution or balance recovery through the capital increase or decrease.

The Royal Decree-Law 10/2008 has been rolled over year after year, even if it was originally established for years 2008-2009 only. In 2011, a very similar regulation was approved, called the Royal Decree-Law 9/2011, which stretched the compensation period to three years.

Last March 7th, the Goverment approved the Royal Decree-Law 4/2014 with an aim to renew Zapatero’s ruling once more as ‘the exceptional period ends in 2014’.

The current Government of Spain has to decide until March whether it is going to prolong the law, which has saved many real estate firms from liquidation, or not. The authorities claim respective clauses were added to the Bankruptcy Law.

However, that regulation would not be enough to stop dissolution of the companies, reckons Mr Gomez-Pintado, as maintenance of the Royal Decree-Law is crucial while the norms on giving the second chance to viable firms are being negotiated for the other Law. Barcelona Developer Association Head Marc Torrent agreed that although the sector is surely experiencing a turning point, it is not capitalized sufficiently to face lack of the Law as the fight is also against becoming insolvent.

The Royal Decree-Law 10/2008 repeatedly appears in annual reports of real estate firms. When it comes to the listed ones, some of them managed to improve considerabe parts of their balances this year.

For instance, Colonial pointed out that if it hadn’t been to the Decree, its land affiliate Asentia would have been dissolved on 31st December 2013. The firm, now having Villar Mir as the majority stakeholder, sold the troublesome branch this year.

Furthermore, Martinsa Fadesa avoided liquidation in 2013, in spite of having net balance in the red. Quabit admitted an 18.8 million euro deficit in its accounts, but instead thanks to the Law it is planning to float its own Reit now.

Finally, Reyal Urbis, currently in talks with creditors, was shown a 429.9 million euro hole in 2013 but it defended itself from total bankruptcy by including the Royal Decree-Law 10/2008 in its annual reporting.


Original story: Cinco Días (by Alberto Ortín Ramón)

Translation: AURA REE

Reyal Urbis Owes €458 Mn to the Treasury, Regional & Local Authorities

3/12/2014 – Expansion

Reyal Urbis owes €457.88 million to the Tax Office, several regions and city halls. This is a mere 11.5% part of the €3.98 billion total liability of the property manager.

Reyal Urbis went bankrupt in 2013 with €2.5 billion in the red. At that time, it disposed of a €1.47 billion worth of real estate available to pay the debt off. The company chaired by Rafael Santamaria repeatedly stated it was working on an agreement with creditors to be presented ‘in the nearest future’.

During recession, the asset valuation carried out at the moment of bankruptcy got outdated as it had not taken into consideration any transactions pending closing, nor the asset depreciation over time. Specifically, sales offloaded its balance by €232.10 million and the value loss took away another €689.62 million.

Current debt of Reyal is mostly made up of ‘fees for issuing certificates by corresponding administrative bodies’.

In the first nine months of the ongoing year, the company lost net €483.6 million which adds 35% to its 2013 ‘red’. The loss was driven up by provisions and increased accrued liability caused by interests.


Original article: Expansión

Translation: AURA REE