Tag: small creditors

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

Setback For Sareb: Suspension Of “In Tempo” Foreclosure

24 October 2016 – El Mundo

The soap opera involving In Tempo, the tallest residential building in Spain, continues. And the latest episode represents a real setback for Sareb, the main creditor of Olga Urbana, the company that went bankrupt after constructing the famous skyscraper in Benidorm.

Commercial Court number 1 in Alicante, which is handling Olga Urbana’s bankruptcy, has suspended the foreclosure of the property, which, in theory, was going to be awarded to Sareb, after it submitted the only and highest bid, amounting to €58.5 million. The judge has ruled in favour of the appeals submitted by Olga Urbana’s smaller creditors against the aspirations of the bad bank, which had been hoping to take over the building after it spent the summer contending that it had submitted the only official bid.

Nevertheless, according to the ruling dated 13 October, the magistrate considers that In Tempo cannot be awarded until the bankruptcy incidents that are affecting the process have been resolved. As soon as firm rulings have been issued regarding these incidents, the foreclosure will be approved, but not before. This represents a serious setback for Sareb: it had planned to foreclose the 190m tall building and then resell it,  whereby recovering some or all of its debt, which amounts to €108 million in total.

The bad bank will now have to wait until the bankruptcy incidents have been legally resolved. The claims have been filed by Olga Urbana’s small creditors, who consider that the liquidation plan would be harmful for them, given that, in their opinion, they would not recover any of their debt; these companies maintain that Sareb should not hold preferential creditor status, which gives it the right to recover its debt first.

According to these creditors (which include the construction company Kono, the arquitect Robert Pérez Guerras and the former administrator of Olga Urbana, Isidre Boronat), Sareb was an administrator of Olga Urbana and therefore, is responsible for the creditor bankruptcy of the company, which went bust at the end of 2014 with liabilities amounting to €137 million.

The creditors argue that the bad bank should be the last party to recover its money (…). In this way, the small creditors would recover their money before Sareb.

Given that this question has not been decided yet, the judge handling the bankruptcy has opted to wait for clarification as to whether Sareb is a preferential creditor or not, because a premature foreclosure could affect the interests of the other creditors. Meanwhile, Sareb maintains that the foreclosure of the building, which has been valued at €90 million, forms part of the liquidation plan, and would not be harmful to the other creditors.

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

Translation: Carmel Drake