Polaris World Update

I attach the most up to date info recieved so far which confirms that the courts have accepted the PW application for protection and some commentary:

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. If 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.