LEGAL NEWS
Polaris has “practically closed the deal” to renegotiate its debt .
The developer hopes to sign the deal before the deadline and thus avoid declaring itself bankrupt.
The agreement between Polaris World and its banks and creditors “is practically a done deal” and should be signed within the next few days, according to statements yesterday by a spokesman for the developer from Murcia, leader in the residential tourism market. He pointed out that a few loose ends need to be tied up and that this will avoid a declaration of bankruptcy, which is the target set by the company when it announced the current state of insolvency of fifteen of its mercantile companies in December to Mercantile Court Nº 2 in Murcia. An exhaustive valuation of assets has taken place over these last few months to tackle a debt estimated at some 83 million euros.
Polaris World was given a period of three months to reach an agreement, a period that expires on the 29th of this month as the courts processed the announcement three days before the end of last year. Polaris will settle the debt with the assets it still owns from its portfolio of homes, hotels and golf courses distributed around the resorts built in the municipalities of Torre Pacheco, Murcia and Alhama.
Legal options
The people in charge of the company, whose major shareholder is Pedro García Meroño, took the decision to begin the pre-bankruptcy proceedings in order to control its financial situation and avoid a total declaration of bankruptcy. This was the intention announced from the outset, as well as its desire to maintain staff levels, employing some 700 people. The banks and savings banks with which it has been negotiating have always expressed their wish to reach an agreement. Over the course of the last few months, the people in charge of Polaris have preferred to maintain silence regarding these talks.
The announcement sent to the Mercantile Court will be filed away when the agreement is signed. The company made use of this legal option, provided for in Section 5.3 of the Spanish Bankruptcy Act, in order to avoid certain creditors forcing bankruptcy. It is a measure that gives three months of breathing space to companies with solvency problems.
Lowering prices further
The situation of this company, and the others in the same sector, could improve over coming months according to how the real estate market improves in the same period, which is showing signs of a slight recovery. Sources from the savings banks in the Region of Murcia consulted by this publication indicated yesterday that movement is being felt in the United Kingdom and Germany, from where the majority of foreign buyers of second residences come. At the height of its success, Polaris World performed a study that claimed some 10,000 properties of all kinds were sold on an annual basis in the Region of Murcia. That situation lasted only a few years until the collapse of the sector brought down almost all the real estate companies.
The current situation that Polaris has found itself in is also a result of a cooling market and the lack of buyers, which has meant the company has been left with a large number of new properties unsold, aside from those it transferred to the banks and savings banks in the middle of last year by way of payment intended to settle most of its debt, which was estimated to stand at some 1,000 million euros at the time.
Future buyers are waiting for prices to hit rock bottom before making a move. For example, English buyers and investors are still interested in acquiring properties in the Region of Murcia, something that is demonstrated by the fact that there are real estate agents that continue to organise trips to attract clients and inform them of existing offers. These sources claim they are still selling properties, although the future owners believe prices will fall yet further.