MADRID: Spanish property developer Martinsa Fadesa has said that it would file for liquidation bankruptcy in one of the country’s biggest insolvencies, which comes as the sector shows signs of recovery from a 2008 real estate collapse.
The company, a symbol of the excesses that led to the country’s property sector collapse, said in a regulatory filing that its board had decided on the move after failing to win support from banks for its latest debt repayment plan.
Martinsa Fadesa, a builder of homes, malls and golf courses which is active mainly in Europe, said Friday it holds assets worth 2.4 billion euros ($2.7 billion) to meet debts worth 7.0 billion euros, making its collapse one of the biggest bankruptcies in Spanish history. The company sought voluntary creditor protection in July 2008 after it failed to get a loan to refinance its debt and became the first major casualty of the crisis in Spain’s housing market. It spent almost three years under creditor protection before reaching an agreement with its lenders in March 2011.
As part of the accord, the company agreed to make annual debt payments for eight years and sell assets, but it has struggled to make payments. The company had until February 26 to reach a new accord with its lenders but 75 percent of its creditors declined its proposal, according to Spanish media reports. Banco Popular, Abanca, Caixabank and Spain’s so-called “bad bank” Sareb, which was set up to cleanse Spain’s rescued banks of their soured property loans and real estate, all rejected Martinsa Fadesa’s plan, the reports said. These institutions should not be affected since they have already made large provisions and set up bodies to manage assets,” said Pablo Kindelan of global real estate consultancy Pablo Kindelan.
Martinsa Fadesa was formed in 2007, at the height of Spain’s property boom, through Martinsa’s debt-financed takeover of Fadesa for over 4.0 billion euros, which created one of Spain’s largest real estate firms. The following year Spain’s decade-long property bubble collapsed due to rising interest rates, more restrictive lending standards and oversupply. Spain, the eurozone’s fourth-largest economy, plunged into recession when the property bubble burst, forcing the government to bail out the financial system and enforce austerity measures that left one in four workers nationwide unemployed.