Spanish courts favours Polaris World - not the consumer

We signed a contract with Polaris World for buying a townhouse at Mar Menor Golf Resort in 2005. It was not started to be built in 2009, and we had not received a bank guarantee either. For that reasons, we had lost our belief in Polaris World and was tired of Polaris constantly ignoring our efforts of getting in contact with them during these years. So we decided we didn't want the house, but our prepaid money back. Until then we had paid 126 000 euroes, and became worried about the whole thing. Therefore we contacted a lawyer, and we brought Polaris World to the court. The townhouse was at last started to be built in 2010, and finished during that year, but the house was of no interest for us anymore. 

The court gave their final decision (after their first decision had been appealed) in november 2013. They gave us two options - 1) fullfill the contract or 2) accept an offer from Polaris World (don't know yet what this could be).

One of the main arguments from the court was to protect the Polaris World firm for not going bankrupt, so therefore we didn't get our money back - Polaris World should have them!. Seems rather strange and disgusting that the spanish court system protects firms like Polaris World.... 

Suppose in a way it was for the best that the court didn't let Polaris World go bust, (If thats what you're saying) at least now you have the choice of having a house, even though you don't want it, or accepting some sort of offer from them, the other alternative was for you to get nothing at all due to Polaris World going bust.

Does sound a bit like "One percent of something is better then One Hundred percent of nothing" 

Afterall, when things are like they are - you are probably right! Can now only hope for a reasonable offer from Polaris World. Just wondering what that could be.

After all, when things are like they are — you are probably right! Can now only hope for a reasonable offer from Polaris World. Just wondering what that could be.

In the very least that has to be, or should be your full amount of the money back that you handed over, it sounds like maybe the court knows something that cant be common knowledge or spoken publicly about this company, perhaps the court knows Polaris has funds to cover these, and many other costs, just wondering why if the company has no assets at all why didn't the court let it go bust.

If Polaris is a bad risk why let it keep trading and break out another set of future problems for Spain and its house building programme.

Wouldn't be a surprise if one of the biggest stock holders or owners of Polaris is the Judge either.

Now I don't know how true or fact based any of this is but it seems that on the 11-Oct-2013 IRM took over Polaris World, IRM is a company that the creditors banks set up to take over the assets of Polaris world to avoid a spectacular bankruptcy...Their words...IRM has just gone to court to seek protection from creditors...That sounds to me,  so they don't have to pay monies out to creditors.

50% of Polaris World is owned by a person called Pedro Garcia Merono.

Perhaps this is why the court, as you said, was protecting the company.

This message was last edited by baz1946 on 17/12/2013.

So in the eyes of Spanish Law the protection of a developer who failed from the outset to provide a legal BG as required by law over-rides a consumer's inalienable rights as per Ley 57/68 following major delay? Can this be correct Keith/Maria? Is this ruling contrary to previous Supreme Court rulings?

Perhaps Maria or Keith could clarify

IRM is owned by 3 banks and have been given 4 months to pay creditors or go bust.

 Just noticed this :

___________________________________________________________________________________

Sareb, the Spanish bad bank, is going to cause significant losses to its shareholders, Sabadell, Popular and Caixa, as well as the Deposit Guarantee Fund (FGD), with its refusal to refinance the company IRM (Investments in Mediterranean Resorts), which owns all of Polaris World´s assets which were taken over by the banks.

As a result of this refusal IRM initiated voluntary insolvency proceedings last month with a debt of 630 million euros (of which Sareb is owed 309 million euros, a debt which was transferred from Bankia and Banco de Valencia) and participation loans for an amount totalling 581. Sareb has chosen this course of action as its claims have seniority over the claims of the banks, which means that it will keep all of the company´s assets, which include numerous plots of land and the Intercontinental Hotel in Murcia.

IRM was created in 2009 to manage the assets of Polaris World which were taken over by four banks (CAM, Bancaja, Banco de Valencia and Popular) when they first refinanced Polaris World in an attempt to prevent it from going bankrupt. Polaris World is a conglomerate of Murcian companies and was one of the best-known of all Spanish property developers during the property bubble. The assets transferred to IRM were the least liquid ones, as they chiefly comprised agricultural land in Alhama de Murcia, where the company had intended to build a Paramount theme park, although the project eventually came to nothing.  Since then IRM has been trying to negotiate an agreement which would enable it to sell its assets, but the process has become so drawn-out it has been unable to meet its payment obligations. Popular and Sabadell were in favour of refinancing the company again in the hope that this would enable them to recover their money in the future. However Sareb´s refusal to provide more financing has forced IRM to file for voluntary insolvency. The company now has four months in which to reach an agreement with its creditors and, if it fails to do so, insolvency proceedings, formerly known as a suspension of payments, will be initiated.
Sareb versus its shareholders
It might seem paradoxical that the bad bank refuses to refinance a company which belongs to the banks. However, this can be explained by the fact that Sareb is a creditor of IRM but is not a shareholder (it owns only 12 million euros). Under the terms of Royal Decree-Law 1559/2012, which established the bad bank, Sareb´s claims have seniority over those of the banks, and consequently, given the valuation of the worth of the assets, it will be awarded all of IRM´s assets. If this is what eventually happens Sareb will have successfully salvaged what it can (although it will have to write down a loss because these assets have greatly depreciated in value and are worth less than the 300 million euros that IRM owes), while the other banks will be left empty-handed. According to sources close to Sareb, which is a semi-public asset management company, Sareb would rather receive the assets through the insolvency proceedings and then sell them, which is what it was designed for, than dedicate itself to trying to collect the loans it is owed. Furthermore, in this particular case it is exceedingly unlikely that IRM will ever be able to pay off its outstanding loans. This is why Sareb has chosen to force it into bankruptcy instead of maintaining it as a zombie company.

Polaris World, the group which owned the assets that were transferred to IRM, has been virtually stripped bare since the creditor banks also took over the good assets (mainly completed homes next to golf courses) and sold them at discounts of up to 60%. The group, which was one of the best-known property developers during the property bubble, was founded in 2001 by Facundo Armero and Pedro García Meroño, two property developers from Torre Pacheco, who launched an aggressive campaign to expand their developments located on the coast of Murcia, which included massive advertising in Spain and abroad.

__________________________________________________________________________________

This begs the question where does this leave offplan purchasers' deposits that were supposed to have been protected according to Ley 57/68 with rights of cancellation and return of monies following delay to delivery of the property?

How can Banks (whether they be the Sareb Bank or others) become preferential creditors/senior claimants, when it was the Banks from the outset who have failed to comply with the obligations imposed on them via Ley 57/68?

Can Banks in Spain become the beneficiaries of their own serious financial illegalites, gross negligence and lack of due diligence which have significantly compromised innocent consumers?

Has the Bank of Spain facilitated non compliance of this law by their failure to supervise the Banks and has failure of transparency and deficiencies in the land registry (not registering offplan contracts / provision of secure accounts) hidden the scale of offplan deposited monies at risk in Spain during this last decade?

These are serious questions that require both internal and external investigation.

All this happens while the Board of Directors without a care in the world sit behind their Mahogany desks in the plush Board Room debating on how they can give themselves, and get away with yet another bigger bonus this year then they gave themselves last year.

I doubt if any of them make one mention, or even care to think about the thousands of people that gave them house deposits to keep them in this lifestyle knowing full well that almost all guarantees given out would never be honoured.

Surely a strange system is in place when all banks can ruin peoples lives over many hundreds of thousands  of €'s...£'s Yet when you owe them a tenner you get a couple of £..€...15.00 almost to the point of threatening letters the next day, they owe you many thousands and ignore it. 

And the worst thing is it wont ever change.

I think Polaris will make you a ridicoulous offer as they don t want a property back at this stage

I have seen them selling for 50000 euros now so if polaris offer you 55000 then sell to them and visa versa.

Dont forget add 20% on to the 126000 for closing if you go ahead but you would be throwing good money after bad

http://www.condadoinvest.com/property%20of%20the%20month.htm

Thanks Hugh

ps dont think the judge will ever side with a buyer when he is probably getting a Bentley for xmas from Jack Nicklaus mates the Polaris schemes are horrible Little Britain on steroids ,middle of nowhere tiny little poorly built boxes even by Spanish standards they are poor.

Ollestad: Is this an Appeal Court Decission or a First Instance Court Decission?

Ads: Of course not. Bankruptcy Law does not come above law 57/68 but... it makes ( according to Case Law) the application of this to be delayed till the results of the Bankruptcy.

Thank you Maria.

How does the Sareb bank fit into this Maria, as the implication is that the Sareb Bank has become senior claimant " Under the terms of Royal Decree-Law 1559/2012, which established the bad bank, Sareb´s claims have seniority over those of the banks, and consequently, given the valuation of the worth of the assets, it will be awarded all of IRM´s assets."?

Does this mean that there will not be any assets left to recoup for these offplan purchasers, but that action can continue in the form of claims against Bank(s)?

Thank you all for the replies, information and interest in the case.

To Maria: According to my lawyer the decision has been appealed. I think my case, like so many others, has been judged very badly, and represents undoubtedly a very sad blow to the reputation of the spanish judges. The independence of the court seems yet again to be highly questioned.

Have no illusions of getting a reasonable offer from Polaris - my lawyer says the offer should come before christmas - I wait and see and of course I don't expect any kind of gift...