Insolvency forces Spanish developer Habitat to seek protection from its creditors

After months of desperate manoeuvrings to try and avoid bankruptcy, the Spanish developer Habitat has finally thrown in the towel, filing for administration this morning in Barcelona. With debts of 2.3 billion Euros, Habitat is the second largest developer to be forced by financial problems to seek protection from its creditors this year, after Martinsa-Fadesa.

Barcelona-based Habitat, run by Bruno Figueras, just managed to avoid bankruptcy proceedings back in February, when local bankers and politicians managed to arm-twist reluctant foreign lenders into agreeing to new repayment terms. But with the Spanish property market moribund, and the credit markets closed by the crunch, Habitat failed to meet the new repayment terms.

Habitat has released a statement with the usual blurb that developers reach for when they run out of money, arguing that administration is the best move for the company to “guarantee its continuity,” and stating its determination to “continue with business as normal.” Given the state of the market, however, it is hard to see how the company will emerge from administration.

Far more likely is that the company’s assets will be sold off to pay back creditors. Habitat’s clients, who may include some expat buyers, need to review their situation urgently, and decide what to do.

Habitat is not the only big Spanish developer that has been teetering on the brink. Colonial, one of Spain’s largest quoted developers, today announced that it may also be forced to seek the protection of administration if it fails sell some of its large stock holdings.

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