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

Silken Hotels’ Owner Files For Bankruptcy With €400m Debt

11 February 2015 – Cinco Días

The British investment fund Carey lobbied for Urvasco to file for bankruptcy

Urvasco has suffered from financial imbalances for years. When the financial crisis hit, the company held substantial investments in its hotel and property development businesses. To try and solve its problems, it has sold assets ranging from wind turbines to works of art, but has not managed to balance its books. Finally, this month, Commercial Court No. 1 of Vitoria has issued an order for the bankruptcy of the group owned by the businessman Antón Iráculis, which has liabilities of more than €400 million.

Carey Value Added has lobbied for this process, according to the judgement issued by the magistrate María Teresa Trinidad. The British fund was a partner of Urvasco when they launched a hotel together in London; the project failed.

As a result of that failed investment, Carey was left with a debt of €68.9 million, which was recognised by the High Court in London in April 2013. In 2008, Urvasco did not obtain financing for the construction of the hotel in the English capital because the financial institutions realised that it did not meet the required solvency levels; this damaged Carey, which had already financed some of the investment in advance.

The British investment fund requested the recognition and enforcement of that foreign resolution in Spain. That resulted in a long dispute between both parties, which ended in the Commercial Court No. 1 of Vitoria. In her sentence, the magistrate María Teresa Trinidad stated that Carey “has proven the general non-payment of overdue obligations”, by both the Grupo Urvasco (UG), as well as by its subsidiary Grupo Hotelero Urvasco (GHU), which is 93.25% owned.

The magistrate also added that the debt of €68.9 million was recognised in GHU’s accounts at the end of 2013. This stake is managed by the hotel chain Silken, which includes 32 establishments, according to information gathered from the company’s website. The best known are the Puerta América in Madrid and the Dómine in Bilbao; the latter is located opposite the Guggenheim Museum. They also own the Ciudad de Vitoria in the Álavan capital.

In addition to its hotel business, Grupo Urvasco is one of the leading property developers in Spain, although its shares are not publicly traded. In Bilbao, it constructed the Torres Isozaki, which house almost two hundred homes along the Nervion River.

Urvasco has 20 days to file an appeal with the Provincial Court of Álava against its insolvency. Sources close to the process take it as a given that the company owned by Anton Iráculis will resort to this action, since it previously fought “hard” against Carey’s debt to classify it as “not overdue and under judgement” (pending judicial review).

A significant part of the Basque group’s liability is a syndicated loan amounting to €152 million with a syndicate of financial institutions, including BBVA, Banco Popular, EBN and CaixaBank.

The total debt balances will be disclosed over time, when the bankruptcy administrator, the company Sindicatura, collects all of the information. The creditors have one month to communicate the Grupo Urvasco’s non-payments and close its consolidated liabilities.

Original story: Cinco Días (by J. Vadillo/L. Salces)

Translation: Carmel Drake