A Spanish real estate group filed for bankruptcy on Tuesday, reported Marketwatch.
The company Reyal Urbis SA emerged a year before Spain's real estate market crash in 2008. Reyal Urbis formed from the merger of Inmobilaria Urbis and Construcciones Reyal and quickly became a favorite when the market was thriving.
Now, the real estate company is on the verge of becoming Spain's second-largest bankruptcy case, with 3.6 billion euros of debt, according to Reuters.
In a statement, a Reyal Urbis spokesperson told Marketwatch that they will remain confident in reaching an agreement with creditors. According to Spanish law, the company can conduct a private reformation processes with creditors or sell assets at high liquidation values to remove outstanding debts.
The company is owned by Rafael Santamaria, a construction magnate. The estimated debt is 3.6 billion euros, which translates to $4.8 billion, to a number of banks. One of the banks just happens to be Spain's "Bad Bank" as it's called, which restructured last year to become Sociedad de Gestion de Activos procedentes de la Reestructuracion Bancaria, SAREB, which means "Society for the management of assets proceeding from the reconstruction of the Banking System," according to QSD Repossessions group.
This bank is supposed to take more than 90 billion euros of bad property from the country's commercial banks and other poor-performing property loans.
The other creditors for Reyal Urbis are also some of the largest, including Banco Santander SA, Banco Popular SA and Appaloosa Management, which is a U.S. hedge fund that specializes in distressed debt. The chain of unfortunate events has overall implications on the country's economy, which was already spiraling downward.
Another real estate group, Martinsa-Fadesa also claimed a large, and perhaps the largest default in Spain's history when in 2008 they defaulted on 7 billion euros in debt, according to Reuters. They came to an agreement with their creditors to streamline approximately seven billion euros worth of debt.
Currently, Reyal Urbis has a market value of 35 million euros, Marketwatch reported. Since they announced their bankruptcy they suspending trading of company shares with the last exchange at 0.12 cents.