Martinsa-Fadesa bankruptcy proceedings update

A group of frustrated Martinsa-Fadesa clients are threatening the company with a lawsuit to get their money back. Most of them have made stage payments to the company but have no property to show for their money.

The 500-odd member strong ‘Association of People Affected by Martinsa-Fadesa’ has given the company a deadline of a few days to negotiate the return of stage payments or face legal action as allowed by the ‘demanda incidental’ procedure dealing with companies in administration.

Representatives of client groups affected by Martinsa-Fadesa’s problems complain that, in many cases, the developer is refusing to admit that it is in breach of contract, making it difficult for clients to demand their money back or exercise bank guarantees.

The Spanish press reports that there are some 4,000 to 6,000 people who have made stage payments to Martinsa-Fadesa of between 20,000 to 180,000 Euros with nothing to show for their money.

Ángel Pablo Hita, President of the Association of People Affected by Martinsa-Fadesa, claims that 30% of them do not have bank guarantees, despite it being a legal requirement.

According to the administrators, 1,955 of the company’s clients do not have bank guarantees to protect their stage payments totalling 65 million Euros.

The company has reportedly asked the Judge to put these clients first in line for repayment when the company is in a position to start paying off its debts.

Meanwhile, the Spanish press reports that Martinsa-Fadesa plants to pay 37 million Euros to the consultants, lawyers, accountants, and court-appointed administrators working on the company’s insolvency procedures, but only 12 million Euros in redundancy payments to 585 employees the company is laying off. Redundancy payments are set to average 21,000 Euros per person.

Fernando Martín, President of Martinsa-Fadesa, who has been forced to seek court protection from his own creditors after presiding over the biggest failure in Spanish corporate history, is drawing a salary of 75,000 Euros a month to run the company whilst it is in administration.