Baraka Triggers the Immediate Suspension of the Building Work at Edificio España

23 November 2018 – El Economista

The magistrate of the Court of First Instance nº 67 of Madrid has ruled that the building work on Edificio España in Madrid be suspended immediately due to the risk alleged by Baraka before that legal body.

Baraka, the company owned by the businessman Trinitario Casanova, filed a lawsuit before the courts of Madrid in August requesting the suspension of the building work on the hotel in Edificio España, in Madrid, which is now owned by the hotel chain Riu. The hotel firm purchased the iconic building in Plaza España from Baraka last year.

Baraka is claiming in the courts that the commercial premises inside the building, spanning 15,000 m2, belong to it and that Riu is refusing to sign across the deeds.

The hotel group Riu indicates that it has not yet received any notification to suspend its building work, according to sources speaking to El Economista. The hotel chain clarifies that Baraka does not have any contract with purchase rights or to register on public record the commercial space in Edificio España. Indeed, they note that at the time of Riu’s purchase of the building, Baraka signed “a non-representative mandate contract to search for investors for the commercial area, which it has failed to do”, despite repeated requests from the hotel chain.

The firm points out that a sales agreement has been reached with Corpfin Capital Real Estate for the commercial area, which was signed in September and which is on the verge of being executed. Riu is threatening to sue Baraka for damages and losses if the building work at Edificio España is affected. The hotel chain is going to invest between €380 million and €400 million in the project, including the purchase of the building (around €272 million) and its renovation.

The future hotel will be a four-star property and will have 589 rooms, 15 meeting rooms and almost 3,000 m2 for social and corporate events. The inauguration of the hotel is planned for September 2019 and the property will operate under the brand Riu Plaza.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Riu Wins Legal Battle over Ownership of Edificio España

15 November 2018 – Preferente

On Thursday, the judge of the Court of First Instance number 51 of Madrid rejected the provisional measure requested by Grupo Baraka against Riu Hotels regarding Edificio España, where the hotel chain is finalising the construction of the largest hotel in the centre of the Spanish capital.

The judge sided with Riu and ruled that Grupo Baraka must pay the legal costs. Baraka sought to record in the Property Registry that an open litigation case existed regarding the ownership of the building, but that claim has been rejected by the court.

Riu considers that the legal ruling clearly shows “the lack of basis imposed by Mr Casanova and his business group, which represents an important step for clarifying that Riu is the sole owner of the property”.

The hotel chain led by the siblings Carmen and Lui Riu expects to open its new hotel in Madrid, the jewel in the crown of the Riu group, next spring.

Original story: Preferente (by R. P.)

Translation: Carmel Drake

Sareb Holds Board Meeting As Martinsa’s Deadline Looms

26 February 2015 – Cinco Días

Sareb held an ordinary Board meeting yesterday (as it does once a month) with the case of Martinsa Fadesa on the table. The creditor banks of the real estate company have until today, Thursday, to decide whether or not to approve the new proposed agreement presented by the company to avoid its liquidation. According to financial sources, the debt obligations that Sareb holds in Martinsa Fadesa amounted to €1,457.8 million as at June 2014. The (real estate company’s) second largest creditor is Caixabank with €907.9 million.

Martinsa Fadesa submitted a new proposed agreement to avoid its liquidation to its creditors on 30 December, since it is unable to make some of the payments stipulated in the previous agreement. Under the new proposal, the company highlighted that if it won its claim in the Supreme Court against Manuel Jove, the former chairman of Fadesa, against whom it had filed a multi-million euro lawsuit, then it would allocate the resources to pay its creditors.

Fernando Martín (pictured above) agreed the purchase of Fadesa from Manuel Jose between 2006 and 2007, in a transaction valued at €4,045 million. In 2008, Martinsa Fadesa filed for bankruptcy, the largest ever case in Spain, with debts of approximately €7,000 million. In 2011, the company reached a payment agreement with its creditors and so emerged from bankruptcy. That same year, the company decided, in its shareholders’ meeting, to file a social responsibility claim against Jove and the former CEO of the company, Antonio De la Morena, for €1,576 million. The former Chairman of Fadesa, who is now the Chairman of the Inveravante group, said then that the measure was “absolute nonsense”. The Commercial Court number 1 in La Coruña and the Provincial Court of La Coruña rejected the claim filed by Martinsa Fadesa, and so the company appealed to the Supreme Court. This month, the Supreme Court also rejected Fernando Martín’s claim.

The blow dealt by the Supreme Court to Martinsa Fadesa damages the real estate company’s prospects of avoiding liquidation even further. In addition, the Supreme Court ordered the company to pay all of the legal costs, which will require the immediate disbursement of several million euros (up to €60 million, according to legal sources).

Between January and September 2014, Martinsa generated turnover of €95.2 million, an increase of €24.5 million on the same period in the previous year, and it recorded losses of €201.6 million (vs. losses of €322.9 million during the first three quarters of 2012). In 2013, the group lost €652 million, and recorded negative equity of €4,288 million.

Like many other real estate companies, despite having a negative net equity balance, Martinsa avoided the requirement for dissolution under the Companies’ Act, thanks to Royal Decree Law 10/2008, which removes the requirement to account for impairments relating to real estate investments. Martinsa’s financial position is clearly very delicate and may be further compounded by the fact that the Government may decide not to renew the relevant regulation this year.

Representatives of the creditors met with the company last week and called for the departure of Fernando Martín as owner and shareholder, according to sources. Although liquidation may seem like the most logical course of action for the company, the same sources do not rule out the possibility of a last minute agreement being reached to avoid that measure.

Original story: Cinco Días (by Alberto Ortín Ramón)

Translation: Carmel Drake