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The Spanish Lawyer Online

Spanish Law Tribune

Keeping up-to-date with Spanish Law


Archive for April, 2010

Polaris World Avoids Falling Into Insolvency

April 23rd, 2010

As we had previously reported, PW was on the brink of filing for Insolvency if it failed to renegotiate 85 million euros of debt. It had already negotiated successfully to refinance over 900 million euros.

PW has successfully waived filing for receivership on reaching an agreement late last night with CAM, Bancaja, Bank Popular and Bank of Valencia to sell assets for the amount of 83 million euros. In exchange PW has transferred ownership of dwellings, golf courses, plots of land and hotels. It has taken PW the last 4 months to re-negotiate its debt commitments. Official confirmation will be today.

The group of companies affected by the possible insolvency were two hotels (Mar Menor Golf Hotel and La Torre Polaris Hotel), El Valle Golf Resort, Polaris World Sports Centre, Polaris Desarrollo, Hacienda Riquelme, Polaris World Development, Polaris World Alquiler de Maquinaria Industrial, Polaris World Hormigones, Polaris World Real Estate, Hacienda Verde, Nicklaus Golf Trail, Mar Menor Golf Hotel, La Torre Polaris Hotel, Centro Comercial El Oasis de Alhama, Oasis Polaris Ciudad, y Alhama Golf Resort.

Currently it has 700 employees which is a long shot from the 2,000 it used to employ in the boom years.

Source: La Verdad (http://www NULL.laverdad NULL.html)

Property, Uncategorized , , , , , , , , , ,

Bank Santander Estimates Property Prices in Spain Fell an Average of 50% on the Costas and 30% in Cities

April 21st, 2010

Bank Santander released yesterday a report titled “The Contrarian View” which upholds that market adjustment in Spain’s property sector has now almost concluded. Indeed, living up to its name, it’s a contrarian view.

They estimate property prices have fallen on average 20 to 30% in large Spanish cities. These properties are in the vast majority main residences. The major fall has taken place on the Spanish costas, which are mainly second homes or foreigner’s overseas summer homes. They estimate the average fall in this segment reaches 50%.

In their report they estimate the real estate market peaked out in 2007.  They forecast that Spain’s GDP will resume feeble growth in 2011 picking up pace on the following years.

I find unsurprising the fact that main residences have fallen less than their second home counterparts; that was reasonably in line with what everybody expected.

What I find surprising is the report claiming that property prices have fallen 50% on the Spanish coasts on average. As many would-be buyers who actually booked flights from the UK or elsewhere to fly over to Spain (when that was still possible!) on the hope of finding a dream villa for a 50% discount can attest that this simply is not the case. There has been a lot of hype going on property falling by 50% but frankly this contradicts any empirical observation.

There has been a significant market correction, no doubt, but not to the extent of a 50% fall on the costas. It’s true that some isolated off-plan developments perched atop hills which are a good 10 minute drive from civilization have fallen 50% or maybe even more, but these are few and do not constitute a general rule.

I would say, being coherent with the articles I write, that property prices will still keep on falling across the board over the next years, however steadily. I find the report’s conclusions a tad overoptimistic to be honest. For example, it remains to be seen how the huge property portfolio in the hands of struggling Spanish savings banks (http://ftalphaville NULL.ft unfold in the near future affecting price fixation when –and if– they are released openly into the market.

This could seriously add pressure driving down prices further adding to the oversupply. Lenders are going to great lengths not to release en masse their ever-growing property portfolios as a result of repossessions (http://www NULL.marbella-lawyers or “daciones en pago de deuda (http://www NULL.marbella-lawyers“. Fortunately the Government is always there to help them (if not bail them out) amending accounting rules where necessary so balance sheets aren’t hurt.

It’s reassuring that those in need are helped out when needed.

Nevertheless I’d say there are already available interesting bargains (since 2009 actually) mainly from the classic three D’s (divorce, disease, death) and non-performing mortgage loans. But we have not yet reached that stage of capitulation in the property market which this report seemingly implies. I’m sure we will get there at some point or other.

In any case the spring season traditionally brings a surge of conveyance procedures and we are now witnessing a renewed interest in Spanish property over the last month. That is, providing volcanic activity keeps a low profile! Fingers crossed.

Source: Cotizalia (http://www NULL.cotizalia NULL.html)


Volcanic Ash, Cancelled Flights and Passenger’s Rights

April 19th, 2010

So, has your flight been cancelled back to the UK? Both European Parliament Regulation EC 261/2004 (http://eur-lex NULL.europa!celexplus!prod!CELEXnumdoc&numdoc=304R0261&lg=EN) and of the Council of 11th February 2004 establish common laws ruling on the compensation and assistance of flight passengers in case of denied boarding or great delay in take off which is applicable and enforceable in all EU member states.

Following this regulation, in case of flight cancellation, passengers are entitled to the following (Art 7 Rights to Compensation):

  • Full refund of the air ticket within the next 7 days or alternatively to a ticket to the starting point or been driven to the destination point.
  • Pampering (drinks and food, hotel lodging, transport from the airport to the lodging destination, possibility of making two free phone calls or else send two telex, two faxes or two emails)

To a flat fee compensation which will amount to:

  • 250€ for flights of up to 1,500 kms
  • 400€ for paneuropean flights of more than 1,500 kms. For the rest of the flights between 1,5000 and 3,000 kilometres.
  • 600€ for all flights that may not be included in the above categories

Operating air carriers however will be able to waive paying compensation if they are able to prove either that a force majeure (volcanic ash is as good as it gets!) took place or else severe meteorological conditions that may compromise the flight’s security (Art 94 of Flight Law). Art 5.3 of EC 261/2004 rules further on this:

5.3. An operating air carrier shall not be obliged to pay compensation in accordance with Article 7, if it can prove that the cancellation is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.

This waiving of responsibility is nothing more than an extension of the legal principle set forth in article 1.105 of the Spanish Civil Code whereby as a general rule no-one may be held liable to compensate as a result of unforeseen events or even if foreseen, were altogether unavoidable.

Uncategorized , ,

Is Polaris World Running Out of Time?

April 14th, 2010

Polaris World. We’ve all watched the TV ads with renowned golfer Jack Nicklaus selling us an affordable dream lifestyle under the sun surrounded by beautiful golf courses just a short drive away from the beach.

Unfortunately the dream may turn into a nightmare for many would-be off-plan buyers as Polaris World is now on the verge of filing for Insolvency within the next week. The events which have lead to this situation can be summarised as follows:

  • On the 22nd December 2009 Polaris World filed before Murcia’s Company Court number two a proposal to reach an agreement with its creditors within three months thus avoiding filing for Creditor Protection.
  • On the 22nd of March 2010 it requested an additional -and final- extension of 30 days which was granted by the court.
  • This extension ends in 8 day’s time, on the 22nd of April 2010.

If Polaris World fails to refinance its whole debt within the next week it will be forced to file for receivership in what would become one of Spain’s largest insolvency proceedings do date.

The positive note is that out of the €985 million (870 million pounds) in debt that it needed to renegotiate so as to remain afloat it has already successfully negotiated over €900 million over the last three months. Within the next 8 days Polaris World legal representatives will lead a frantic race against time to strike a deal on the last hour on the pending €85 million.

The stakes are high and the pressure must be almost unbearable for all those involved.

Taking in perspective what’s already been achieved by the negotiators, I believe the €85 million seems a feasible goal.

Source: El Economista (http://www NULL.eleconomista NULL.html)

Litigation, Property , , , , , , , , , ,

Promociones Eurohouse 2010 Files For Receivership

April 9th, 2010

As we had previously reported on the month of February 2010 Promociones’ Eurohouse 2010 receivership was imminent. Perhaps the “2010” included in its name was as an ill omen.  

The official announcement (http://www NULL.boe NULL.pdf) has now been made in Spain’s Law Gazette. Creditors will now have 30 days to lodge their credits joining the Creditor’s List.

The deadline to join the Creditor’s List ends on the 30th of April 2010. Credits submitted after the said deadline may be jeopardized.

Non-exhaustive list of affected off-plan developments:

  1. Fortuna Golf Gardens
  2. Fortuna Hills Golf Resort
  3. La Mirada
  4. Residencial San Pedro
  5. Residencial Miramar
  6. Miramar
  7. Residencial San Pedro del Pinatar

Off-plan purchasers need to collate the following original documents:

  1. Original Private Purchase Contract
  2. Original stage payment receipts of having sent over the funds (including the initial reservation deposit) on to Promociones Eurohouse 2010.
  3. Original bank guarantees (http://www NULL.marbella-lawyers

To represent a client throughout the whole receivership procedure (not just to merely add them to the Creditor’s list) a Power of Attorney will be required which needs to be both notarized and legalized (with the Hague Apostille). Arranging this POA takes on average 7-10 days from the UK so it is advisable to plan ahead so as not to overrun the 30 days deadline.

Lawbird offers this legal service for a flat fee of €1,300 plus sundries (TBA).

Payment in installments is available upon request.

Appointed lawyers will seek to best defend client’s interests in the ensuing procedure taking the following actions, amongst others:

  1. Claiming from the judicial administrators the creditors’ position of the clients submitting all the necessary documents on time and in the due manner. To challenge adopted resolutions on the matter if proven detrimental to the inclusion in the Creditors’ List (this may entail additional legal fees).
  2. Continued monitoring of the receivership procedure ensuring client’s rights are upheld
  3. To negotiate with the judicially-appointed administrators reaching agreements as necessary.
  4. To keep the client informed on the ongoing procedure
  5. Assisting to Creditors’ meetings to defend the client’s interests
  6. To claim or challenge judicially agreements taken by Elche’s Mercantile Court number 3.

Litigation, Property , , , , , , , , , ,