Spain’s Martinsa wins court protection from creditors
Spanish court rules that the property company faced imminent insolvency because of its ability to repay debts on time.25 July 2008
MADRID - A commercial court on Friday accepted Spanish property company Martinsa-Fadesa's request to be given protection from creditors in what is the biggest failure in Spain's corporate history.
The court in A Coruña in the northwest of Spain ruled that Martinsa-Fadesa faced "imminent insolvency" because of its inability to meet the repayment of its debts on time.
However, it also said this did not mean the real estate company did not have enough assets to meet all of its obligations.
Martinsa-Fadesa petitioned to go into receivership on 15 July after failing to raise a EUR 150-million loan demanded by its creditor banks as a condition for a rescue package. The property company has financial debts of some EUR 5.2 billion and declared assets of EUR 10.805 billion.
The company fell victim of a slump in the Spanish housing market after a decade-long boom. The global credit crunch added to its liquidity problems.
Martinsa-Fadesa welcomed the decision by the court and said it was confident of reaching an agreement with its creditors in a reasonable period of time.
Ángel Ron, the chairman of Banco Popular, which is owed EUR 400 million by Martinsa-Fadesa, also said he was confident the property firm can avoid being wound up.
The Martinsa-Fadesa board of directors will be allowed to continue to manage the company but must answer to a three-member board of administration, which is to be headed by an overseer to be named by the National Securities Commission.
[El Pais / Adrián Soto / Expatica]