What's Happening With Aifos?

Published on 15/09/2009 in Your Spanish Home

Commercial Court No. 1 of Malaga has opened the deadline for creditors of developer Aifos,  under voluntary insolvency proceedings, to report their credits to the administration, as published on the 23rd of July, in the Official State Bulletin (BOE).

AifosCreditors have one month to communicate in writing to the Court their credits, with al pertinent data relating to its concept, size, maturity and acquisition dates and characteristics. Importantly, the creditors need to mention and ground the qualification that they intend to their credit, as provided in Article 85 of Insolvency Act.

Aifos retains the powers of administration and disposition of its assets, subject to the intervention of the insolvency proceedings´ administration.

It is important to note that these Insolvency proceedings are designed, in principle, to try to save the economic life of the company through agreements with creditors and not always the end is in bankruptcy, ruin, disaster or catastrophe! 

Of course, a good legal direction of the participation of creditors in the process makes the difference as to the cashing possibilities of the credits.

For example:

1) If you were fortunate enough, (even when as you know it is a legal obligation out of Law 57/68) to receive a Bank Guarantee or insurance policy, the financial institution or insurer who signed the guarantee will have to respond, i.e. your rights against such entities are not affected by the insolvency proceedings. A different matter is that they might oppose the payment; in this case, you must urge the execution of the Policy to the Judge.

2) If you have a contract with Aifos that can be legally cancelled, it is actually being cancelled or has been already awarded a cancellation by the Judge, you have got good tools to fight for your credit to be considered "against the goods/estate" and be paid first, as a regular credit which is not imposed with the rules and restrictions of the insolvency proceedings, i.e. your credit will not be affected by the insolvency proceedings. 
 
As additional information for those who still have some curiosity on Aifos: they have claimed insolvency by "insufficient working capital and the need for short-term financing" claiming they have a “net patrimony (difference between economic values that owns and debts or obligations) of 268.5 million € at the beginning of 2008”. 

The company filed for insolvency proceedings by arguing that it is in a state of imminent insolvency and that the company is in a progressive deterioration of its activity.

It is important to also remark that the defence of off-plan buyers, consumers in this type of proceedings is a challenge due to the inexistence of Case Law on the matter at the present moment. Both  Insolvency and Consumers Law give enough instruments for a good concert for the benefit of consumers, the weak parties.

Written by: Maria de Castro

About the author:

Maria de Castro is a Spanish Lawyer and the Director of the Law Firm www.costaluzlawyers.es.

Costa Luz Lawyers are contract and consumer real estate law specialists covering all parts of Spain. You can contact Maria at mldecastro@costaluzlawyers.es




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