Bankrupt developer Martinsa-Fadesa can’t cope with debts

[Anonymous]

The Spanish press reports that bankrupt developer Martinsa-Fadesa is trying to renegotiate debts again.

Martinsa-Fades is currently under court administration, having sought voluntary protection from its creditors. It seems the company can’t cope with the debt calendar it agreed with its banks. Just another symptom of how rosy things are in the Spanish property market.

Lost of foreigners bought off-plan from Martinsa-Fadesa and didn’t get bank guarantees.

[Anonymous]

I have three friends who have brought from them & have paid there 40%. The properties are ready and deteriorating, my friends have the balance and are ready to pay. The administrators are not willing to cut a deal not only cut a deal they dont even bother to acknowledge receipt of correspondence.

This is one example & if we extrapolate the situation. How quickly the assets can be realised and creditors are paid.

[Anonymous]

I would urge any purchaser suffering from Bank Guarantee problems – either having not being issued with the legally required Bank Guarantee or having been issued with the Bank Guarantee you are now finding the Bank will not honour it – to go to: http://www.bankguaranteesinspain.com and join the BANK GUARANTEE PETITION.

Make your voice heard.

Kind regards

Keith

[Anonymous]

Spanish press reports that Martinsa-Fadesa has got 74pc of creditors to approve a new debt repayment plan. The deal is they have 10 years from 2012 to repay their debts. If the court receives no objections in the next 10 days the company will be out of administration and back in business.

[adiep]

Any idea how much money were talking about?

[Anonymous]

The biggest Spanish developers coming out of administration is good news for the Spanish property market, but I doubt that it’s good news for the individual buyer (investor).

Having paid their 40% deposit, those individuals may now consider rescuing their money by completing the deal, but the contract with the developers is now around two years old, and property prices have definitely fallen since then.

Personally I would accept the loss of deposit and buy another property with the remaining money at today’s prices, it would be cheaper. Unless Fadesa are prepared to re-negotiate the price on the contract, which doesn’t appear to be the Spanish way of doing things.

Suing for breach of contract to have the deposit returned would be a simple matter in the UK, but Spanish law is a wee bit more complicated, and takes a wee bit longer.

[adiep]

If the Caja’s or Spanish banks are the creditors who are allowing these guys to pay off their debt over 10 years, then I guess this will all just get rolled up into the bank bailouts.

[Anonymous]

There’s a misunderstanding here, the Spanish banks have not had a bail-out, and are unlikely to need one. The reason is simple: The UK and other countries were seduced by those poisonous US debt packages and bought them up like sweeties, and Northern Rock, RBS and HBOS needed to be bailed out, to stop a collapse of the banking system.

Spain didn’t have that problem, the Bank of Spain wisely made those US purchases illegal.

I watched David Cameron, a politician I admire, announce that while he was PM, the UK would never join the Eurozone. He did look embarrassed when he made his statement.

The truth is, the UK couldn’t now join the Eurozone anyway. The maximum debt level for joining is three percent, we’re at eleven percent and rising.

[katy]

According to this their liabilities were 5200 million.

http://www.creditwritedowns.com/2008/07/largest-default-in-spanish-history.html

It is also believed their assets were vastly overstated.

Couldn’t make it up could you

[adiep]

Its considered something of a fact that the Spanish banks are sat on assets that are not worth anything like their book values, they have very high levels of NPL’s (non performing loans), thousands of repo properties and acres of expensive developer land on their books. They also have massive exposure to bankrupt builders, such as the one were discussing in this thread.

Spain didnt need to buy US toxic assets, they were busy making their own.

[peterhun]

@Rocker wrote:

I watched David Cameron, a politician I admire, announce that while he was PM, the UK would never join the Eurozone. He did look embarrassed when he made his statement.

Embarrassed? why would anyone, never mind a politician be embarrassed by such a statement? How on earth would you come to that conclusion? Only an idiot would suggest the UK joined the Euro and I would be amazed if even 2% of the uk population would vote for it.

The probability of the Euro surviving the next 10 years; 20% according to one research organisation.

@Rocker wrote:

The truth is, the UK couldn’t now join the Eurozone anyway. The maximum debt level for joining is three percent, we’re at eleven percent and rising.

It its deficit not debt.

UK isn’t alone in failing the deficit criteria, Spain fails it as does Germany, Italy, Ireland, Greece, Portugal, Belgium. In fact I don’t think ANY Eurozone country fulfils the membership criteria for the Euro zone.

Poland does either, much to its relief, when Germany started haranguing Poland to join the Euro in the past few days..

The UK deficit is temporary; however countries like Spain and the other PIIGS have structural deficits built into their economy. UK is taking action to fix the deficit, Spain is not (deficit 8%).

@Rocker wrote:

There’s a misunderstanding here, the Spanish banks have not had a bail-out,

They are in the process of getting a bail out.

[adiep]

@peterhun wrote:

@Rocker wrote:

There’s a misunderstanding here, the Spanish banks have not had a bail-out,

They are in the process of getting a bail out.

One could consider the retreat into ECB provided liquidity as a bail out, considering that the wholesale money markets wont lend to Spanish banks.

[Anonymous]

Katy posted
“According to this their liabilities were 5200 million. http://www.creditwritedowns.com/2008/07 … story.html. It is also believed their assets were vastly overstated.

Couldn’t make it up could you.

Yes here lies another issue that does not discussed on the forum i.e. the unprofessional/corrupt Auditors. If the Assets were over stated. Why this was not stated in the Audit reported by the Auditors ? Whose valuation was taken by the Auditors for reporting purposes to the shareholders, market etc.

[Anonymous]

Instead of speculating on future bank bail-outs, I think that the biggest danger facing all European countries at this time is inflation – the back-door killer. Any economic recovery can easily be negated by the old enemy, and it’s back.

The UK is in a good position as a one-man-band. We can deal with it quickly and effectively and don’t need the consent of 17 other countries locked into a bureaucratic nightmare to make a decision.

Cameron and Osborne must be eagerly saving all those monthly letters from Mervyn King, Gordon Brown’s pal, admitting failure to deal with the target he has been set. It’s just a matter of time before they call him in to fire him. A Conservative chancellor without the ability to set interest rates is like a man with an arm, and two legs missing.

Inflation equals higher interest rates, higher wages, a higher home currency and rising house prices, it cannot be any other way. Properly controlled, it’s good for a country, especially coming out of a recession.

This being a Spanish property forum, any talk of house price rises in Spain at this time is silly, at least in the short term. But if we concentrate on the UK buyers benefiting from inflation and hoping to buy a property in Spain, it being the favourite destination for British expats, then a future price rise in Spain is probable, against the current odds.

To get back to Fadesa, the largest Spanish developers, their exposure to foreigners is minute, their main customer is the domestic market in gigantic developments around Madrid, Barcelona and Bilbao. To the best of my knowledge, their only exposure to foreigners is in a remote region of western Andalucia.

They were well respected for the quality of their building, completed on time with the local infrastructure in place. The world-wide recession brought them down.

[Anonymous]

rocker: Have a look at their web site, they have 1 development in Alicante, 5 in Murcia, 3 in Malaga & 2 in Valencia. I suspect quite a few foreign buyers will be caught up in this mess.

[Anonymous]

” They were respected for their quality” What yard stick is being used here. Speak to the people who have bought in Guadelmina, Costa Esuri & Saadia in Morocco.

[adiep]

@Rocker wrote:

Instead of speculating on future bank bail-outs

It’s closer to this threads topic than UK Inflation 😆

So Martinsa-Fadesa have ten years to repay 5bn euros? 500m a year? Is that even vaguely possible given how most think the property market may be treading water for the new few years.

Surely they are likely to end up being shut down.

[Anonymous]

News is that tomorrow Martinsa-Fadesa are holding a shareholders’ meeting to discuss the final steps of administration. Shortly after that they should officially be out of administration.

Will their new debt payment plan work? Good question 😕

[kgpoc]

Whatever is said at the meeting tomorrow the option they have will be designed to not allow failure but without any possibility of success = extend.

[adiep]

5bn euros. Thats a lot.

Who do they owe that to? Do we know?

[adiep]

Any news? What happened?

just read the amount is actually 6.6bn euros, not 5bn.

[Anonymous]

Martinsa-Fadesa now officially out of administration with new debt repayment plan approved by many of the creditors and the courts.

http://www.elpais.com/articulo/economia/Martinsa/Fadesa/supera/concurso/acreedores/elpepueco/20110311elpepueco_7/Tes

[Anonymous]

Martinsa-Fadesa now officially out of administration with new debt repayment plan approved by many of the creditors and the courts.

http://www.elpais.com/articulo/economia/Martinsa/Fadesa/supera/concurso/acreedores/elpepueco/20110311elpepueco_7/Tes

[Anonymous]

Some news in the press today about Martinsa-Fadesa’s latest results.

Losses in Q1: 33 million Euros
Turnover in Q1: 21 million Euros
Outstanding debts: 5 billion Euros.

If you assume that MF turns over roughly the same amount in all the remaining quarters of the year, than means around 100 million Euros turnover in 2011. That’s just 2.5pc of the outstanding debts. If these figures are right, I fail to see how this company will every pay off its debts.

[adiep]

Have a link as reference for these numbers Mark?

[Anonymous]

How can any creditor let this go on? This just reeks of money being shifted under the tables.

[Anonymous]

There’s a misunderstanding here, the Spanish banks have not had a bail-out, and are unlikely to need one. The reason is simple: The UK and other countries were seduced by those poisonous US debt packages and bought them up like sweeties, and Northern Rock, RBS and HBOS needed to be bailed out, to stop a collapse of the banking system.

Spain did not have a banking crisis for some time

As rocker correctly says the Bank of Spain outlawed junk mortgages from the States.

However what they did allow for a long time was let us say a creative accountancy ploy which was to allow Spanish banks to put original top of the market valuations in their balance sheets , when it was known in a forced sale situation the said asset would be 40%-50% less.
Think Santander and BBVA have now allowed for a 20%fall in their balance sheets.

Have a look at CAM and most of the cajas, not a pretty sight/site.

Get the local government elections out of the way on Sunday then the real blood letting will be seen, if PP sweep the country as seems likely then the necessary cuts will come in the bloated local governments, PP will blame the socialists who will become even more unpopular and lose the general election in March 2012 by a landslide, the PP will then get a bailout from Europe and about 5 years later Spain will pick up.

2017 will be a good time for a roadshow.

[Anonymous]

Fernando Martín, boss of Martinsa-Fadesa, has proposed to his personal creditors a 60pc cram-down on his debts of 122 million Euros and repayment in cash starting in 5 years. He racked up his debts taking over Fadesa.

[Anonymous]

Small fish with big ambitions. I have three friends who have paid 40% on their purchase they are ready,able & willing to pay the balance. No one at Fadesa/administrtors is there to complete the transactions in the mean time they keep on receiving threathing Calls/letters .

On their development in Guadelmina baja, Cam bank is offering a mortgage even though the FLO is not been issued by the Marbella Council. Where is Snr Transparent Blanco ???

[Anonymous]

The latest news on Martinsa-Fadesa is losses in the first 6 months of the year reduced by 14pc to €317 million, turnover down 20pc to €62m, and auditor Deloitte says it sees “significant uncertainty” as to whether the group can stay in business.

[Anonymous]

The Spanish press reports that Martinsa-Fadesa has admitted that it is struggling with liquidity problems again.

Some of you may remember that MF went into administration in 2008 and emerged in 2011 after a long period under court protection from its creditors. But it still has 5.6 billion Euros of debt, and business is bad, so if you ask me it was allowed out of administration prematurely. Will this business ever be a viable concern? I doubt it.

In a statement MF say their situation “might interfere with building projects and, as a consequence, lead to unfulfilment with clients.” Not for the first time!

Top management like the boss Fernando Martin (pictured below) have continued to draw multi-million Euros salaries throughout the process.

[katy]

Beggars belief that a Company that is clearly insolvent is allowed to operate/exist 😯

[DBMarcos99]

@katy wrote:

Beggars belief that a Company that is clearly insolvent is allowed to operate/exist 😯

Seems to be quite common – so long as the company concerned can wrangle credit? Entities like the Guardian group or even HMV seem to get propped up or rescued – I was always under the impression it was meant to be illegal to operate in this way. 🙄
And of course banks like Bankia, Popular, RBS, Northern Rock etc are all being propped up.

[Anonymous]

Martinsa-Fadesa lost €18m in Q1 this year, on sales of €27m, down 7pc in a year. This is a company with €7 billion in debts 😯 . No way it can survive without someone bending the rules big time.

[Anonymous]

A loss of 66.66% on the turnover. It will be interesting to see the accounts/managing accounts to establish what was their gross profit/gross profit margin.

[Anonymous]

The press reports that Fernando Martín, Presidents of Martinsa-Fadesa, will earn a €9 million bonus if the company manages to stick to it’s recovery plan 😯 Way to go 🙄

Mind you, I think the chances of the company fulfilling its obligations are quite small, though I expect he’ll carry on drawing a fat salary.

[Chopera]

@mark wrote:

Martinsa-Fadesa lost €18m in Q1 this year, on sales of €27m, down 7pc in a year. This is a company with €7 billion in debts 😯 . No way it can survive without someone bending the rules big time.

As the saying goes, if you have a million dollar debt then you have a problem. If you have a billion dollar debt then the bank has a problem.

[Anonymous]

I read today that if Martinsa-Fadesa meets the payments of its debt restructuring plan, boss Fernando Martín gets a bonus of €9m. This is the biggest business failure in Spanish history, and this guy keeps taking home millions 😯

No wonder he looks pleased with himself.

[angie]

Mark, it’s called ‘reward for failure’ and is systemic worldwide, happened in Banking in the UK and other countries, happens if you’re a failed football manager or player, County Council chiefs get huge pay-offs even after 12 months in the job, and let’s not forget Merve the Swerve King at the BOE fabulous pension pot over £5mill, and a Lordship to go with it even though there were mistakes, Rajoy will enjoy his perks, Blair the warmonger gets a fortune, the list goes on, then of course there’s all those Spanish Town hall Mayors etc 🙄 Meanwhile the World’s populace has to fight for justice or just gets stuffed 🙄

[Anonymous]

Well, he just missed the latest debt repayment, so maybe he won’t get his bonus.

[Anonymous]

Mark, this is Spain the debt will be rescheduled and a bonus will be due for rescheduling the debt & the next bonus will
due for taking a coffee without spilling it.

Friend of mine has paid 40% for a house & is willing to pay cash for the balance at a freshly agreed price. Fadesa will not agree and still insist that the balance is due of the original price.

I have made an offer for a plot of land that is owned by Fadesa & also marketed by the local agents. My offer is the price of the land less the agents commission which Fadesa will have to pay to the agent if I buy through the agent. You guessed it the price remains the same.

I am aware that Fadesa, under Court order has to sell at a price determined by the Court’s. These prices are now atleast three to four years out of dare.

[Mark Stücklin]

Martinsa-Fadesa’s creditor banks have rejected it’s latest proposal after it failed to meet interest payments. They have suggest liquidation as the “most viable” option for this zombie developer. That should have been obvious years ago.

[Mark Stücklin]

Martinsa-Fadesa finally put out of its misery.

I imagine that quite a few British investors lost money in this shambles.

[Ollie]

Mark

Do you think there are many UK investors who lost their deposits because of the Martinsa-Fadesa collapse?do you know if there were UK agents selling the properties for Martinsa

-Fadesa in the U.K.?

If any UK investors in any of the Martinsa-Fadesa developments in Spain, Bulgaria or any other country  you mentioned that M.F were involved in , were advised to remortgage or use their Pensions to fund their deposits , there may be a way for man y of them to get compensated.

I myself used a company in the UK called The Mortgage Claims Bureau – http://www.themortgageclaimsbureau.co.uk and with their help  I got 70k  from the FSCS (Financial Services Compensation Scheme).

M y advice to anyone who has lost out is to contact these guys yourself as they might be able to help you.

Good luck

 

 

 

 

 

[Mark Stücklin]

Yes, people lost deposits, and yes, there were agents selling in the UK

[Mark Stücklin]

Martinsa-Fadesa has finally been de-listed from the (Madrid) Spanish stock exchange, as part of the liquidation process. For seven years it was listed but suspended, meaning shares couldn’t be traded. That gives you an idea how slowly companies are wound up in Spain.

[Author]

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