Polaris in Bankruptcy Protection!

 Just seen article on La Torre site - Polaris has filed for Bankruptcy protection - provides them with 3 months to renegotiate their debts, otherwise they move to full bankruptcy. - filed on 22nd December.

Great news around Christmas - at least they got the golf course finished!

Don't really know what this will mean to us, but can't be good.

Ted

Below is a translation from   http://www.elmundo.es/mundodinero/2009/12/28/economia/1262018753.html

 Murcia. - Polaris World has requested to the court that several of his companies could take refuge in the term of three months that the Law Concursal grants to renegotiate his debts before declaring itself in creditors' contest, according to sources of the company of residential tourism. The company requested last December 22 authorization to take refuge in this modification of the Law Concursal, for which there already asked other companies of the sector as Nonczar or Proinsa. The request has relapsed into the Court of Mercantile number 2 of Murcia, as they indicated in judicial sources. The possibility that a company in state of insolvency is provided with a margin to negotiate an agreement of payment to creditors, without none of these urges his contest, is gathered in the article 5.3 of the Law

Concursal.

This article, after the reform of the norm of March 27, 2009, establishes that " the duty to request the declaration of contest will not be exigible to the debtor who, in state of current insolvency, has initiated negotiations to obtain adherences to an early proposal of agreement and, in the term established in this Law, it makes it known of the competent court for his declaration of contest ". " Passed three months from the communication to the court, the debtor, beech or not reached the adherences necessary for the admission to step of the early proposal of agreement, will have to request the declaration of contest in the following month ", he adds the legal text.

Can anyone translate the translation and put it into laymans terms. I still will be surprised if the local government don't step in if it is that bad

 It means they have 3 months to renegotiate their debts with all of their creditors, otherwise they will have a court appointed administrator and move into bankruptcy.  Why would the local government step in?  They are probably one of the creditors.

Oh no were will this leave me im not far off compleating and have just sent back my bank guarantee and paperwork just before xmas very very very worried now any news or info welcome

Not what any of us want to hear..........  I found this on another website I hope it is resolved quickly I felt sick when I read it and have already e-mailed my solicitor!!!

Logically, it is not in the banks interests to let Polaris World go bankrupt. They have a lot of money tied up in the project. If the worst happened and they did go bust, surely the assets of the company, which are the properties, would be taken over by a third party [ probably one of the creditor banks ] and sold as a going concern.

Also, do we know if it it is the main Polaris company which has filed for protection, or is it one of the many sub companies of Polaris ?

I've also just read the EOS article at the top of the CDA home page, titled  ' What to do if your developer goes bust '

 More facts need to emerge, to get a clearer picture. I dont think at the moment, the situation is as black as it seems.

Whilst these are very uncertain times we're all going through, renegotiating loans to get a more favourable rate of interest on loans is a common ploy used by large corporations and companies. Whether or not this is the case only PW will know. It does go on though. Like all building companies / developers, PW have had little or no new sales to speak of over the last 18 months but I do know that Murcia is a region that the Government want to enhance and PW are integral to those plans. The major Spanish banks have all financed PW from the very start. I suppose I'm saying we need more info before we should start to panic. 

 If the Insolvency proceedings are approved and you were not given a Bank Guarantee for the securing of your money, I would certainly start issuing a claim against the Bank which did not meet obligations under Law 57/68 for compensation of damages.

Hi,

For a bit more detail on the Polaris World Situation I have read a good article on Simply Networking in the news section. 

I thinks it really bad that these big companies can keep taking money when they know that there is a possibility that they will not be able to meet their responcibilities.

Josef

http://www.simplynetworking.es/news-1926-31-polaris_world_seeks_court_protection_from_debtors.html

This is the article i have seen

Michelle

 it looks like ALI G and his friends are back, here we go again

So what does this actually mean to us owners if the worst was to happen?

You mean to owners who has completed?

Could you explain what it means to both owners who have completed and also in the process of purchasing i.e. paid the 40% deposit etc

 I am an owner on PW hacienda Riquelme resort and there is a lesson there for all owners and potential owners. The properties were sold to buyers and the golf course finished, however, we are still waiting 2 - 3 years later for the amenities to be finished so we have no central complex. No club house, bars or restaurants. If you buy a property from PW that may be all you ever get - you may not even get a pool for at least a year. PW will do nothing but build properties and sell them...forget the rest of the resort for years to come and you will have no chance of rental. Use your solicitor to delay any purchase on these grounds - they can do this and delay for as long as possible. Don;t use PW solicitors even if they are free or cheaper. Basically don't complete, delay completions for as long as possible. You will also have no chance with resales.

An application for insolvency status for three months is really nothing substantial. We need to see what the Judge says first.

In general terms, if an off plan developer  is declared under unsolvency status, first think to check out is about the existence of a Bank Guarantee.

If there is a Bank Guarantee and developer does not finish the work on time, you can execute it against the guarantoor in a process whish is completely independent to the Unsolvency proceedings. Anyhow, you also need to register your credit ( amount being claimed) in the unsolvency registry of the company.

If there is no Bank Guarantee, there is much more work to do. You need to start by cancelling your contract ( if house has noy been completed on time) and register your claim within the creditor´s list. If the cancellation is granted by the Judge and you cannot obtain full refund of your money due to the insolvency status of the company. You then have various possibilities:

a) Ask for compensation of damages against the Bank which did not secure on the existence of the legally required Guarantees.

b) Ask your solicitor´s Insurance company to respond before the negligency.

 I undesrtand that this is dangerous for people have not completed. But for those who have completed , there will must not be any problem (in the worst case - in 3 months PW is not able to pay the huge debt- the not completed woluld be suspend (for how long???) but the completed will go on with "normality". In this case we will have to see by who and how the resort is managed

There has been much discussion over the last year or so as to whether Polaris World would muddle through the financial down turn, It appears that they may not in part due to starting so many developments and completing so few. From what I have read in local press CDA will be completed but simply not within the period of time first thought for those who completed a year or two ago. It would not suprise me if this is a ploy to renogiate loan rates by PW or at worst in time a new developer may conclude the project - we can do nothing more than remain informed and remain positive. I know this is easier said than done when rental is an important factor to purchase.

Thank you for your help Maria I think a lot of people will be very worried about this information about Polaris. Hopefully it will be resolved soon, it is not very helpful that Polaris are rubbish at communication so to have some like you on the forum is very much appreciated.