The bankruptcy protection of the Martinsa-Fadesa company takes its toll

The bankruptcy protection of the Martinsa-Fadesa company takes its toll
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By h.b. - Jul 16, 2008 - 8:26 AM

Fernando Martín, Chairman of Martinsa - Archive Photo EFE

The company's debts are now estimated to be more than seven billion euros.

The collapse of the Martinsa-Fedesa company, which has filed for bankruptcy protection in the face of massive debts, has left an estimated 12,500 families fearing that their new homes will not be completed. The Government though has said that it will ensure that the company meets its obligations in such cases.

The suspension of payments in Martinsa, which now has reported total debts of more than 7 billion €, led to large falls among other builders and also banks on the Spanish stock market yesterday.
Caja Madrid, which lent the company 1 billion € said yesterday that the debt was guaranteed given the assets of the firm, where the only problem was one of liquidity.

Unions calculate that as many as 4,000 jobs are under threat. 234 workers in the firm are the first to lose their employment.
There are also press reports this morning that the Martinsa company may try and back out of the purchase of Fadesa it carried out nearly two years ago. Under the Ley Concursal, if there is a subsequent bankruptcy, the purchase can be rescinded over a following two year period, and in this case there is still two months to go.

Such a scenario would be a serious one for the founder of Fadesa, Manuel Jove, because ff the courts do decide to annul the operation, he would have to pay back the same amount of money.
Many of the Martinsa problems stem from the interest being charged on the 5 billion € loan the company took out to carry out the purchase of Fadesa 22 months ago.

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