On the request of Terry from Naranjos 4, RPM are setting up a meeting between the community, RPM and Polaris World, the date has not been confirmed yet but we are excpeting it to be sometime next week.  In the meantime, in the words of Cpl Jones, "Don't panic", there is no point in getting overly concerned until we get all the facts. 

Looking at todays papers ( http://www.laverdad.es/murcia/20091231/region/polaris-dice-garantiza-empleos-20091231.html ) it seems that Polaris are optimistic and expect the situation to be resolved within the coming week.

As others have said, and I agree, it is not in the banks interest to let Polaris go under, they and the other major stake holders ( Credit Sussie etc ) have too much invested, given that the banks own a large number of properties across the resorts they will want to safeguard these.

So for how, don't panic, the full facts will hopefully come to light over the coming weeks.  To quote from the above article "A company spokesman said Tuesday that they expected an agreement "within days", since neither side wants more than necessary to prolong a state of uncertainty between the promoter and its creditors.", so relax, enjoy new years eve and see what 2010 brings.

Phil ( the optimist ) Tann

All,

Before you go out at start the new years partying I suggest you all read the article in yesterdays paper as this brings to light some interesting facts and shows a slightly different view of the situation.    The main facts are that over the past year Polaris have managed to reduce the enormous debt of approching €1000M that they owed to the banks, mainly by the transfer of land and property.   So they are now almost clear of any debt with the major banks, but still have a debt of €100M due to small sub-contractors and other suppliers.  As these smaller firms wouldn't have the finacial ability to continue without getting payment from Polaris World, it is to prevent them from requesting Polaris be put into administration to clear these debts that the protection order was requested.  This will then give Polaris 3 months to seek further aid from the banks to help them clear these smaller debts.   

For the full acticle see http://www.laverdad.es/murcia/20091230/region/polaris-negocia-bancos-para-20091230.html 

So, for me, things don't look all that bad.

Happy New Year.

Phil

I have done my best to research this situation as i am in spain full time now and after several meetings my own conclusions for which i shall not be held liable are as follows-

1)the reason polaris have gone to the courts is that this is the third time polaris have tried to restructure their debts and by law they have to go to the courts on the third occasion this happens

2) the majority owner owns approx 52% of polaris. the majority of the rest is owned by the banks.if the owner cant restructure (and there is a good possibility he can) then buyers for his share will be sort.-worst case scenario and unlikely imho if a buyer cant be found then the banks would take control and put their own management in charge,-polaris would still survive.

3)2010 is going to be another horrible year but will hopefully be the nadir with 2011 seeing  an upturn.

4) for uk golfers and purchasers to return to spain the exchange rate need to move upwards towards 1.25.with the piigs(portugal,ireland,italy,greece and portugal) all in diffucties much  worse than the uk this is not out of the question.its moved up to 1.1275 as i write.

5)the government of murcia is very keen for polaris to survive -especially with the massive investment into corvera airport.

6)golf prices are coming down and this should hopefully attract the golfers.polaris have reduced the green fees to 65 euros for non residents for  all 2010 but i am able to book tee times and get reduced non resident green fees for 56 euros(pm me if interested ).the residents green fee is 55 euros for 2010 but this reduces to 52 euros if you have the new polaris card.(20% iff the 65 euro price)

so all in all lets hope for a happier 2010 and be happy dont worry imho.

Thanks for the updates guys please keep us in the loop if you find out any more info as it is very frustrating not knowing what is going on here in the freezing cold UK !!

HI

Just read a intresting update on dave bangor web page  stating the vice president of Cambank  said  yesterday that Polaris is a leading flagship in the region and I believe we have to give a margin of confidence for the good of all to read the full report click on the link  below

http://davebangor.blogspot.com/ 

Thanks to Dave  for this update

cheers

Graham

Cant say Im overly concerned by this except the reputational hit that Polaris will take short term.  E100m is peanuts in todays world and the PW group is worth far more than this.

What happens in these situations is the equity holders look for all the debt holders to take their share of the pain too.  This ensures the equity holders continue to have an interest in the ongoing business otherwise there is no point them continuing to manage the assets.  On the other side the debt holders want as much of their debt back as possible but they know full well that they have no idea about managing residential property development and really need the equity holders to do that job for them (particularly when polaris look to have been pretty well managed and basically unlucky to be caught in the global financial storm).

Basically everyone wants the same thing, PW to continue as a going concern, and in the short term we have a bit of brinkmanship to decide who gets what slice of the cake and when.  They may also try to jetison a couple of non-core loss making companies at this stage.

Youngers you seem to be a very business minded judging by your post I suppose it is just muppets like me who (hopefully!!) are making a mountain out of a molehill...???? I am encouraged by positive posts and hoping my glass stays HALF FULL.......!!

Thanks

These are the companies impacted. Whilst I started the thread, I don't think that this has to be a major problem for those who have completed, but it could be a big issue for those still waiting to complete.  I hope this is all sorted and we all have a great 2010, I am glad we have a golf course (which I am looking forward to playing in a couple of weeks time!), and a good proportion of the facilities open - looks like it was a good night in the Clover last night!

My glass is definately still half full.

Ted

Polaris World has applied for a 3 month Bankruptcy Protection for the following Companies:

Polaris World ha solicitado una protección de bancarrota 3 meses para las siguientes empresas: 

Hi Ted

You seem to be able to get info and whilst I am not too worried about Condado I am very worried about Terrazas as I am attempting to buy on phase 2 and don't know where Terrazas features in the list of companies you have supplied. worrying times and I keep drinking out of my half full glass!!!!!!!!!

 The real measure Polaris companies have applied for is covered in provision 5.3  of the Insolvency Protection act. This provision allows a company under insolvency status to have a period of time to negotiate an agreement to pay creditors. During this time,none of the creditors can ask for legal Insolvency status and protection. This is part of a reform which was passed in March 2009.

Three months after this , the debtor, having reached or not the required adhesions to the anticipated proposal of payment agreement, must request the Unsolvency status within one month.

In few words: Polaris has legally requested a protection as pre-unsolvent company.  

Interesting take on CDA Services website.

http://www.condadoservices.com/polaris%20problems.htm

Nice to see a positive take on the events.

Steve and Isabel.

See the most recent Simply Networking article  regarding Polaris and their finances. Its relatively positive but does explain the situation in brief.  One point it's making is about the financial demands on Alhama Council and regional community (cost of roads and services)as a result of Condado being built and what it sees as the reason for PW making the announcement when it did. Overall it is saying no-one wants to see PW go down but no bail out has been offered yet.

Maria,

I appreciate the reform is fairly new but where spanish companies have opted to take the approach PW have taken do you have a feel for how likely they are to come back to solvency?  Are we seeing debt for equity swaps which seems to me to be the necessary approach for PW?

Thanks

Hi Smivs,

Wish I did have some inside track, but my source is the La Torre website, who do seem to be very up to date.  www.latorreonline.es  .

Latest, which seems quite positive for our development is pasted below.

Mayor of Alhama meets with management team from Polaris World

Members of the Polaris World Management Team and several legal representatives, met with the Mayor of Alhama, the location of the Condado de Alhama development which is currently still under construction.

After the meeting, the Mayor announced that the Town hall had received the 9 million euros owed to it by the group, for permissions pertaining to the construction of Phase 1 of the development for 3000 homes.

He assured the public that Polaris World had complied with its terms of payment and expressed his satisfaction that the company had made the payment due.

The President of the region, Ramon Luis Valcarcel expressed his "preoccupation" about the possibility that Polaris World should enter into bankruptcy proceedings, although saying that he trusted that, "in the end the situation would be resolved" and that he hoped the financial entities would ensure that the assets in question were safeguarded for the better times that would follow.

There seems to be an over-riding certainty that the situation will be resolved by the financial institutions as they have been forced to bail out the company to such a large degree already that they cannot afford to let it go now.

Pre-occupation, as expressed by the President, seems to be entirely with preserving the jobs of the workforce, and ensuring that the stability of employment and cashflow continues.

The company, meanwhile, issued a statement that they hoped to have the liquidity issue resolved within a few days.

Thanks Ted I had already read this article.  To be honest I have no worries about Condado I think everything will be fine it is my purchase on Terrazas that is the worrying one and it is very frustrating that they have done it so near to the holiday period when people can't get hold of their solicitors!!!  I am trying to remain positive as they are actually building my phase on Terrazas at an alarming rate and the golf course is virtually complete but its the not knowing at the moment

 polaris

Has hit the national press with their money problmes in uk hope we get some good news soon i have had a couple of calls already. Does any one have any more info. It does sound like the banks cannot afford to let them go bit like the banking crisis here

Nick  / naranhos 8 and fareham Hants 

See latest from Fuster & Associates. I think it may be more postive than negative.

----------------------------------------

4 of January of 2010. Fuster&Associates Newsletter nº 49 www.spainsolicitors.com

PROPERTY NEWS Courts accept to proceed with the insolvency situation of Polaris The group now has three months to renegotiate a debt of close to 100 million euros with the banks and savings banks in order to regain liquidity. The judge for Mercantile Court Nº 2 in Murcia today issued an edict in which he agrees to accept as received a communication from Polaris World regarding "its current state of insolvency". The court therefore states its awareness of the "start of negotiations to obtain acceptance of an expected agreement proposal" from the companies El Valle Golf Resort S.L., Polaris World Sports Centre S.L., Polaris Desarrollo S.L., Hacienda Riquelme S.L., Polaris World Development S.L., Polaris World Alquiler De Maquinaria Industrial S.L., Polaris World Hormigones S.L, Polaris World Real Estate S.L., Hacienda Verde S.L., Nicklaus Golf Trail S.L., Mar Menor Golf Hotel S.L., La Torre Polaris Hotel S.L., Centro Comercial El Oasis de Alhama S.L., Oasis Polaris Ciudad S.L. and Alhama Golf Resort S.L.; the companies that comprise the group. The edict goes on to say, "following expiry of a three-month period to be counted from 22 December 2009", the date of said communication to the court, "the debtor shall be required to file for bankruptcy during the following month, whether or not the necessary acceptance has been obtained to proceed with the expected agreement proposal". However, any agreements that are reached would return solvency to the group and, therefore, would remove the need to continue with bankruptcy proceedings. In short, the group has three months from now to renegotiate a debt of close to 100 million euros with banks and savings banks in order to regain liquidity. The edict concludes, "any bankruptcy requests filed by the creditors following the date of said communication will only be accepted once the one-month period provided for in said Section 5.3 of the Bankruptcy Act has passed if the debtor has not already filed a bankruptcy application. I f the debtor files for bankruptcy within said period, this will be processed first, in accordance with Section 14. Once bankruptcy is declared, those requests filed previously and those that are filed subsequently shall be added to the edicts and the applicants shall be accepted as party to the case. Polaris looks for breathing space to avoid bankruptcy proceedings The flagship of residential tourism has three months to renegotiate a debt of less than 100 million euros The collapse of the real estate market and the failure to reduce its debts with banks and savings banks has set the Murcian developer Polaris World down the road to bankruptcy, a situation that the company will try to resolve over the course of the next three months. The pre-bankruptcy situation, formally accepted on 22nd December last through a communication to the High Court of Justice (TSJ), is a result of the residential tourism flagship company's lack of liquidity. This step has caused concern among economical, social and political circles in the Region of Murcia because it may well bring down other suppliers and contractors if the worst case scenario becomes a reality. Experts indicate that, under the protection of legal proceedings, Polaris has chosen a strategy to turn up the pressure on its creditors in search of an agreement and, above all, to avoid any of these creditors forcing bankruptcy. Yielding assets Besides the banks and savings banks, Polaris must also respond to other creditors. If an agreement is reached with the credit entities, the communication issued to the courts would be archived and no bankruptcy proceedings would take place. The company has chosen a formula to protect itself and earn some time During the summer, the developer made attempts to reduce its debt to zero and face the crisis from a better financial standpoint. Talks took place with this group of banks regarding the option to yield a part of the company's assets, which included the land assets owned by the company and a portion of its real estate properties. The group would retain ownership of the resorts, golf courses, hotels and restaurants. Polaris wanted to thus reduce its financial costs because of a drastic fall in revenue. The company claims to own vast assets It claims that many companies in the Region of Murcia are in the same situation with the courts due to the current crisis Alhama sees a 300 million fall in revenue The Condado de Alhama resort is the largest in volume. Work was stopped at the end of 2005 by a vote against it from a councillor in the PP party and the socialist group. It resumed two years later but lost the market momentum. It is the largest complex in Europe, with 12,500 properties.

4 of January of 2010. Fuster&Associates Newsletter nº 49 www.spainsolicitors.com

PROPERTY NEWS Courts accept to proceed with the insolvency situation of Polaris The group now has three months to renegotiate a debt of close to 100 million euros with the banks and savings banks in order to regain liquidity. The judge for Mercantile Court Nº 2 in Murcia today issued an edict in which he agrees to accept as received a communication from Polaris World regarding "its current state of insolvency". The court therefore states its awareness of the "start of negotiations to obtain acceptance of an expected agreement proposal" from the companies El Valle Golf Resort S.L., Polaris World Sports Centre S.L., Polaris Desarrollo S.L., Hacienda Riquelme S.L., Polaris World Development S.L., Polaris World Alquiler De Maquinaria Industrial S.L., Polaris World Hormigones S.L, Polaris World Real Estate S.L., Hacienda Verde S.L., Nicklaus Golf Trail S.L., Mar Menor Golf Hotel S.L., La Torre Polaris Hotel S.L., Centro Comercial El Oasis de Alhama S.L., Oasis Polaris Ciudad S.L. and Alhama Golf Resort S.L.; the companies that comprise the group. The edict goes on to say, "following expiry of a three-month period to be counted from 22 December 2009", the date of said communication to the court, "the debtor shall be required to file for bankruptcy during the following month, whether or not the necessary acceptance has been obtained to proceed with the expected agreement proposal". However, any agreements that are reached would return solvency to the group and, therefore, would remove the need to continue with bankruptcy proceedings. In short, the group has three months from now to renegotiate a debt of close to 100 million euros with banks and savings banks in order to regain liquidity. The edict concludes, "any bankruptcy requests filed by the creditors following the date of said communication will only be accepted once the one-month period provided for in said Section 5.3 of the Bankruptcy Act has passed if the debtor has not already filed a bankruptcy application. I f the debtor files for bankruptcy within said period, this will be processed first, in accordance with Section 14. Once bankruptcy is declared, those requests filed previously and those that are filed subsequently shall be added to the edicts and the applicants shall be accepted as party to the case. Polaris looks for breathing space to avoid bankruptcy proceedings The flagship of residential tourism has three months to renegotiate a debt of less than 100 million euros The collapse of the real estate market and the failure to reduce its debts with banks and savings banks has set the Murcian developer Polaris World down the road to bankruptcy, a situation that the company will try to resolve over the course of the next three months. The pre-bankruptcy situation, formally accepted on 22nd December last through a communication to the High Court of Justice (TSJ), is a result of the residential tourism flagship company's lack of liquidity. This step has caused concern among economical, social and political circles in the Region of Murcia because it may well bring down other suppliers and contractors if the worst case scenario becomes a reality. Experts indicate that, under the protection of legal proceedings, Polaris has chosen a strategy to turn up the pressure on its creditors in search of an agreement and, above all, to avoid any of these creditors forcing bankruptcy. Yielding assets Besides the banks and savings banks, Polaris must also respond to other creditors. If an agreement is reached with the credit entities, the communication issued to the courts would be archived and no bankruptcy proceedings would take place. The company has chosen a formula to protect itself and earn some time During the summer, the developer made attempts to reduce its debt to zero and face the crisis from a better financial standpoint. Talks took place with this group of banks regarding the option to yield a part of the company's assets, which included the land assets owned by the company and a portion of its real estate properties. The group would retain ownership of the resorts, golf courses, hotels and restaurants. Polaris wanted to thus reduce its financial costs because of a drastic fall in revenue. The company claims to own vast assets It claims that many companies in the Region of Murcia are in the same situation with the courts due to the current crisis Alhama sees a 300 million fall in revenue The Condado de Alhama resort is the largest in volume. Work was stopped at the end of 2005 by a vote against it from a councillor in the PP party and the socialist group. It resumed two years later but lost the market momentum. It is the largest complex in Europe, with 12,500 properties.

Much as I hate to bring the thread back to the top, this would appear to be good news so :-

Extract from http://www.laverdad.es/murcia/20100105/region/polaris-bancos-acercan-posturas-20100105.html

"The main property group in Murcia, Polaris World, and a group of banks and are very close to reaching an agreement to renegotiate the approximately 100 million euros of debt of the company that will enable them to resolve the insolvency situation."

Phil

 http://www.eyeonspain.com/blogs/costaluz/2746/lgel-tip-206-steps-if-developer-applies-for-insolvency-status.aspx

Legal tip 206. Steps if developer applies for Insolvency status 
05 January 2010 @ 07:55