Promociones Eurohouse 2010: Imminent Receivership

Raymundo Larraín Nesbitt, February, 24. 2010

Promociones Eurohouse 2010 is a well-known developer based in Orihuela, Alicante, and is a subsidiary of San Antonio Group. Its off-plan developments have been bought mainly by UK and Irish citizens looking to retire and enjoy the mild Mediterranean weather. Regrettably off-plan buyers are in for a nasty surprise within the next days as this developer is the latest victim claimed by the ongoing recession.

It is yet unclear at this stage on whether it will be a voluntary receivership filed by the developer itself or else a forced receivership procedure imposed by one of its numerous creditors (Atlas International) as both have been lodged on the same day before Elche’s Mercantile court. It will now be up to the Mercantile judge to decide on which one it finally accepts. The reported debt, yet to be confirmed, is over 150 million pounds.

As soon as it’s officially announced in Spain’s Law Gazette (“BOE”) creditors will have only a strict deadline of 30 days to lodge before the Mercantile court their financial interest. Failure to join the receivership within this deadline will result in a loss of their stage payments.

Once more, we stress that a developer filing for a receivership procedure does not necessarily equate to bankruptcy, as some sources keep mistakenly reporting. That is something that will be decided at a later stage by the Mercantile judge overseeing the receivership procedure. Spain’s Insolvency Act is geared towards saving ailing companies who may be suffering temporary cash flow problems. Filing for receivership in Spain allows these struggling companies to buy time allowing them to renegotiate and restructure their financial commitments.

In fact many high profile developers who filed for receivership back in 2007 and 2008 have already announced they are exiting receivership and resume normal trading i.e. Llanera Will be the First Spanish Developer to Exit Receivership

Non-exhaustive list of affected off-plan developments:

Fortuna Golf Gardens
Fortuna Hills Golf Resort
La Mirada
Residencial San Pedro
Residencial Miramar
Miramar
Residencial San Pedro del Pinatar

Off-plan purchasers trapped in the ensuing receivership will need to collate the following original documents:

Original Private Purchase Contract
Original stage payment receipts of having sent over the funds (including the initial reservation deposit) on to Promociones Eurohouse 2010.
Original bank guarantees.

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.

Larrain Nesbitt Lawyers offer 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:

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).
Continued monitoring of the receivership procedure ensuring client’s rights are upheld
To negotiate with the judicially-appointed administrators reaching agreements as necessary
To keep the client informed on the ongoing procedure
Assisting to Creditors’ meetings to defend the client’s interests
To claim or challenge judicially agreements taken by Elche’s Mercantile Court

Larrain Nesbitt Lawyers is a Spanish law firm with broad experience in litigation representing hundreds of clients in similar high profile receiverships. Learn more about the Firm.

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