The vice-president of the Balearics, Biel Barceló, is best known for being tourism minister. He has another specific ministerial responsibility that is less well known: innovation and research. This area of activity was one that featured as, if not more prominently than tourism in his party's manifesto. Més, like Podemos, place a great deal of emphasis on innovation and the development and exploitation of new technologies. While these are a feature of tourism, they obviously apply more widely, but whereas we have heard a good deal about Barceló's proposals for tourism, such as the tourist tax, we have heard very little about innovation and research.
Prior to the election, Més proposed creating a digital area out of the Gesa building and its surroundings in Palma. Quite what they had in mind wasn't entirely clear. We may get to know more, as the Més man in Palma, deputy mayor Antoni Noguera, works up his vision of the "model city". We can hope that whatever Noguera and Barceló want for technology, it doesn't go the same way as ambitions of previous regimes. Proudly proclaimed, they came to little or nothing, and yet it is new technologies which offer Mallorca a way out of its massive over-dependence on the tourism industry, if only a relatively small way out.
We have had (and still hear occasionally) the claims of a Silicon Valley in Mallorca, one mainly the product of the ParcBit estate. But such claims, with their extravagant use of hyperbole, are easily enough made. Actually doing something about them is a very different matter.
Back in the days of Francesc Antich and the PSOE-led administration of 2007 to 2011, there were two grand plans. One was the Plan Turismo 2020. Under this, tourist numbers were to be cut, but those that remained would be of greater "quality" and have more money. Sounds familiar, doesn't it. The other was the I&D plan, one for innovation and development. Come the election in 2011, and both had been more or less forgotten. The Antich administration could perhaps point to the mitigating effect of economic crisis for investment on I&D having fallen from the 2005 figure of 183 million euros of the previous Matas Partido Popular government to only 55 million euros in 2009. But the one third cut to this investment from 2008 to 2009 was not mirrored in other regions of Spain. There were increases elsewhere: 25% in Madrid, 12% in Aragon, for example.
Crisis or not, it wasn't as if Antich was being penalised by Madrid. He had Zapatero in charge and a PSOE government that was more generous in its financing of and investment in the Balearics than was to become the case with Rajoy. Yet somehow, the great scheme (never well enunciated) for innovation failed to materialise. Except in one way. Materialise it did in the form of the Big M: Microsoft.
Here was a marriage of new techologies and tourism. The clue was in the title: the Microsoft Innovation Center Tourism Technologies, MICTT, in ParcBit. In a way, it was a misleading name. Microsoft, though it gave the use of its name, didn't actually fund it. Yes, it was to be the principal client. Yes, it was to be involved in some significant projects of direct relevance to the tourism industry. Yes, it was to provide consultancy services in boosting the island's technology industry. But the funding was to come from elsewhere.
In 2010, the Antich administration did increase its I&D budget, but it was from such a low base that the percentage of GDP devoted to it was by then the lowest of any region of Spain. The Bauzá government wasn't much better. Indeed it was, as far as the MICTT was concerned, worse. Not only wasn't investment forthcoming, the government displayed, as is now being said by the board of its foundation, incompetence.
Yet Bauzá was able to show the then Crown Prince Felipe and his wife the touchscreen virtual map of all manner of tourist attractions, points of interest, beaches and so on for use at travel fairs. There was to be a "killer app", a Mallorca tourism hub for the Windows Phone. There was to be the database of locations around Mallorca where there had been filming, replete with relevant videos. The realities were to be different, and now there is nothing of the centre. It has filed for bankruptcy, unable any longer to sustain its debts.
The incompetence was not that of the Bauzá government alone. The Antich administration had launched the project with a great fanfare, but from the outset there was never a clear strategic plan for the centre. A lot of talk and not much else, which brings us to Barceló and to Noguera. What do they mean by a digital area? Do they know?
Showing posts with label Bankruptcy. Show all posts
Showing posts with label Bankruptcy. Show all posts
Tuesday, September 08, 2015
Friday, October 10, 2014
Transhotel's Collapse
This diminishing reputation has not been helped by the way in which Transhotel has conducted itself over the past few months. Last December its employees had been informed by its owners that the company was in financial difficulty. At the Fitur travel fair in Madrid early this year there had been a protest at the Transhotel stand led by various hoteliers with which it was associated. The response was to announce that the sale of the company to Springwater, the Swiss-based investment concern, was imminent. It wasn't. There was a memorandum of understanding with Springwater, but the investment company later announced that it had no interest in making the purchase.
Prior to the statement to employees in December, Transhotel had been in discussions with another reservations company, Hotusa. These discussions broke down but Hotusa were approached again once Springwater's lack of interest became apparent. In August further announcements were made. One said that there was an agreement in principle for the sale of shares to Hotusa; another that Hotusa had actually bought the company. A few days ago any agreement was no more. Transhotel's owners wanted far more than Hotusa were prepared to pay. Transhotel, despite boasting on its website that it has "the latest technology", was considered to have systems that were all but obsolete, something which had deterred Hotusa originally.
Debts that Transhotel have outstanding to hotels are said to be in the region of 30 million euros, though the total debts may be almost double this amount. Travel agencies may also be affected though their exposure through pre-paid bookings is considered to be low. The company's 500 or so employees, left this time to apparently hear the bad news via the media, are also quite clearly affected.
There is some potentially bright news in that Hotusa, despite not going ahead with the purchase, has offered to take over Transhotel reservations. Questions are being raised, however, as to why Transhotel was continuing to accept reservations when it was planning to file for bankruptcy. The company has been given a period of administration for three months, extendable to four, to try and secure its viability and to negotiate with its creditors.
The fallout from this failure will be good news for Hotusa and other reservations companies such as Hotelbeds, but it is bad news for the industry, which is currently having to watch on while legal proceedings involving Marsans are being publicised and made known to an international audience which can only have its faith in the Spanish industry undermined further by the failure of such a well-known brand name.
Tuesday, August 26, 2014
What A Tangled Web: Orizonia and Marsans
Orizonia is just one part of a jigsaw in what has been a story, which is still very much ongoing, of corporate wrong-doing and concealment that ranks alongside cases such as the collapse of Rumasa in the 1980s (and Nueva Rumasa very much more recently) in terms of the scale of fraud, either alleged or proven. Orizonia, which had only been formed through a buy-out from Iberostar businesses in 2006, went under with over 600 million euros of debt. Its collapse is a story in its own right, and one that I have previously written about, but it was a collapse that was a sort of corollary to the much bigger story, the failure of Grupo Marsans.
Less than three months before Orizonia filed for bankruptcy, it had been one of the companies which had been instrumental in the investigation of and arrest of Gerardo Díaz Ferrán, the former boss of Marsans. Orizonia had an interest in one particular part of the Marsans empire, the Hotetur hotel division, which was controlled by a separate holding company, Teinver. Through Hotetur, Marsans owned the Bellevue hotel complex in Alcúdia.
In late 2010, it became known that mortgages had been taken out on Bellevue. Two were for banks. The third, and the largest, at more than 30 million euros, was for Orizonia. By this time, Marsans had collapsed. Teinver and other parts of the Marsans empire had been bought in June of 2010 by an investment company, Posibilitum. The intention had been that Bellevue was to have been auctioned off in February 2011. It wasn't. But then a further option arose. This was that the management of Bellevue might be shared. Orizonia would be one partner. The other would be Al Andalus Management, which had been appointed by Posibilitum as the management company for the complex.
This option, even if it had ever been realistic, ceased to be one when Orizonia collapsed. Its hotel wing, Luabay, which would have been part of the joint-management scheme, was sold to Be Live Hotels, part of the Globalia group. But then there came the formal denuncia that Orizonia, along with Meliá Hotels, AC Hotels and Pullmantur, lodged against Marsans' owners, one of whom has since died. There was a third name on this denuncia, Angel de Cabo of Posibilitum. In the denuncia, it is stated that there were fictitious sales of companies belonging to the Marsans owners. One of them was Teinver.
What emerged was that this had all been a scheme to hide assets from creditors. They were transferred to Posibilitum. It was said that a sum of up to 600 million euros had been paid. The denuncia states that Posibilitum had capital of only one tenth of this amount in 2009.
Díaz Ferrán and de Cabo were both arrested and both sent to prison, awaiting trial. Bail was placed on both of them. In de Cabo's case, it was set at 50 million euros, an amount that was progressively reduced, so much so that in July, de Cabo was released on bail of 300,000 euros supported by assets worth double that amount. He is still to stand trial, as is Díaz Ferrán, but in the meantime, what has happened with the businesses that were caught up in this affair? Bellevue, for example.
In August 2010, Al Andalus, the company put in management charge of Bellevue, bought the BlueBay brand from Posibilitum, a brand which itself was under the Hotetur umbrella. Bellevue has since become a brand of its own, operated by BlueBay which took out contracts to lease Hotetur hotels for a period of ten years.
So, insofar as anything can be said to be clear about this whole affair as it has impacted on Bellevue (and the Lagomonte in Alcúdia), it is that BlueBay are the rightful managers of the hotel. But then who ultimately owns it? Presumably Posibilitum, despite the allegedly fictitious sale from Marsans or a sale that was not of the size which had been claimed. There again, what of that old mortgage that Orizonia had on Bellevue? Did it pass to Globalia when it bought the Luabay hotels?
Tangled web doesn't do the affair justice. It's why it has taken and is taking so long to go through various courts, not only one in Palma. For BlueBay, what does it do with Bellevue, a hotel complex which, for most of its existence, has been its own tangled web?
Photo: The Lago Esperanza from Bellevue.
Sunday, January 29, 2012
Spanner In The Works: Spanair's collapse
In August 2008, following the crash of flight JK5022 at Madrid airport and the death of 155 on board, I asked whether Spanair could recover or whether the flames of Barajas would come to engulf it.
At the time of the crash Spanair was in a dire financial position. Its major shareholder, Scandinavian Airlines, which had founded the airline together with the travel division of the now bust Grupo Marsans, was desperate to find a buyer. It eventually did. A consortium from Catalonia handed over one euro.
The problems at Spanair forced the closure of its operations at Palma airport, leaving behind only call-centre staff and some ground crew, now out of a job. Everything was shifted to Barcelona, and the newly reconstituted airline hoped for better days.
The better days didn't materialise, however. A year ago, almost to the day of the announcement on Friday that the airline would be suspending activities and filing for bankruptcy protection, its future was placed on notice, owing to its financial situation.
The sale of Spanair, though for a nominal amount and for which Scandinavian Airlines retained a minority shareholding, was ill-conceived. The Catalonian government and Barcelona's El Prat airport were keen for the kudos of an airline which had Barcelona as an international hub, and so public money, along with investment from private sources was put into the airline. It wasn't, though, totally clear who owned what. Qatar Airways, which had been looked upon as a white knight, thought better about pumping money into the mish-mash of a corporation (at one stage Qatar Airways was set to become a 49% shareholder), and it was this decision which ultimately brought Spanair to its knees and to the suspension of activities.
The Qatari refusal to inject funds into the airline was the nail in the coffin, the lid of which had been closing because of the withdrawal of public funds. Spanair had been massively reliant on money from the Catalonian government and Barcelona town hall which had revelled in Spanair being the airline of the flag of the city. Reality finally caught up with the Catalonian public authorities, and Spanair, without a white knight or public finance, was doomed.
In truth Spanair has been a bankruptcy disaster waiting to happen. Economic crisis certainly didn't help, but its losses were unsustainable - 116 million euros in 2010, 186 million in 2009. Its main shareholder, Iniciativas Empresarials Aeronàutiques (IEASA), the mish-mash of various public and private organisations which held 85.6% of the airline, finally accepted that a combination of economic crisis, the rise in the price of fuel, competition and pure lack of finance, meant that the shortlived revival of Spanair, following the sale by Scandinavian Airlines, had been shorter than might have been wished.
The reliance on public money has been the thing that has really killed Spanair. Its reconstitution was always, especially at the time that it was being pieced together in 2009, a highly risky proposition, given the depth of the economic crisis. Moreover, the huge amounts of public money were distinctly questionable in a way other than their having been wise use of such finance. Ryanair was one airline to argue that this was a form of illegal subsidy. This was denied on the grounds that payments were investments and not subsidies, but the distinction seemed to be one of semantics. Qatar Airways would have been uncomfortably aware of potential retrospective action by Brussels biting them later on.
Five years of uncertainty have now come to an end. These have been five years during which Marsans, before it faced its own financial death, had at one time sought to take over Spanair completely. In a way it would have been better if it had. "Spanner", as it was sometimes sarcastically referred to, might then have had to close earlier than it has. Arguably, it should have been allowed to go to the wall in 2008 anyway. Instead, it was picked up as partly a vanity project which has cost taxpayers in Catalonia a small fortune.
It is instructive that the Spanish minister for industry and tourism, José Manuel Soria, while lamenting the closure of Spanair, has said that it should also cause there to be "very serious reflection" as to public funds to airlines, be they investments or subsidies. Soria is dead against subsidies, and however the funds to Spanair were described, they still amounted to subsidies.
In the end, it wasn't the flames of Barajas that engulfed Spanair but the absence of an adequate financial base. It has spent the past three years on borrowed time, and now the time has run out.
Any comments to andrew@thealcudiaguide.com please.
At the time of the crash Spanair was in a dire financial position. Its major shareholder, Scandinavian Airlines, which had founded the airline together with the travel division of the now bust Grupo Marsans, was desperate to find a buyer. It eventually did. A consortium from Catalonia handed over one euro.
The problems at Spanair forced the closure of its operations at Palma airport, leaving behind only call-centre staff and some ground crew, now out of a job. Everything was shifted to Barcelona, and the newly reconstituted airline hoped for better days.
The better days didn't materialise, however. A year ago, almost to the day of the announcement on Friday that the airline would be suspending activities and filing for bankruptcy protection, its future was placed on notice, owing to its financial situation.
The sale of Spanair, though for a nominal amount and for which Scandinavian Airlines retained a minority shareholding, was ill-conceived. The Catalonian government and Barcelona's El Prat airport were keen for the kudos of an airline which had Barcelona as an international hub, and so public money, along with investment from private sources was put into the airline. It wasn't, though, totally clear who owned what. Qatar Airways, which had been looked upon as a white knight, thought better about pumping money into the mish-mash of a corporation (at one stage Qatar Airways was set to become a 49% shareholder), and it was this decision which ultimately brought Spanair to its knees and to the suspension of activities.
The Qatari refusal to inject funds into the airline was the nail in the coffin, the lid of which had been closing because of the withdrawal of public funds. Spanair had been massively reliant on money from the Catalonian government and Barcelona town hall which had revelled in Spanair being the airline of the flag of the city. Reality finally caught up with the Catalonian public authorities, and Spanair, without a white knight or public finance, was doomed.
In truth Spanair has been a bankruptcy disaster waiting to happen. Economic crisis certainly didn't help, but its losses were unsustainable - 116 million euros in 2010, 186 million in 2009. Its main shareholder, Iniciativas Empresarials Aeronàutiques (IEASA), the mish-mash of various public and private organisations which held 85.6% of the airline, finally accepted that a combination of economic crisis, the rise in the price of fuel, competition and pure lack of finance, meant that the shortlived revival of Spanair, following the sale by Scandinavian Airlines, had been shorter than might have been wished.
The reliance on public money has been the thing that has really killed Spanair. Its reconstitution was always, especially at the time that it was being pieced together in 2009, a highly risky proposition, given the depth of the economic crisis. Moreover, the huge amounts of public money were distinctly questionable in a way other than their having been wise use of such finance. Ryanair was one airline to argue that this was a form of illegal subsidy. This was denied on the grounds that payments were investments and not subsidies, but the distinction seemed to be one of semantics. Qatar Airways would have been uncomfortably aware of potential retrospective action by Brussels biting them later on.
Five years of uncertainty have now come to an end. These have been five years during which Marsans, before it faced its own financial death, had at one time sought to take over Spanair completely. In a way it would have been better if it had. "Spanner", as it was sometimes sarcastically referred to, might then have had to close earlier than it has. Arguably, it should have been allowed to go to the wall in 2008 anyway. Instead, it was picked up as partly a vanity project which has cost taxpayers in Catalonia a small fortune.
It is instructive that the Spanish minister for industry and tourism, José Manuel Soria, while lamenting the closure of Spanair, has said that it should also cause there to be "very serious reflection" as to public funds to airlines, be they investments or subsidies. Soria is dead against subsidies, and however the funds to Spanair were described, they still amounted to subsidies.
In the end, it wasn't the flames of Barajas that engulfed Spanair but the absence of an adequate financial base. It has spent the past three years on borrowed time, and now the time has run out.
Any comments to andrew@thealcudiaguide.com please.
Wednesday, December 14, 2011
MALLORCA TODAY - Real Mallorca avoid liquidation
Real Mallorca football club, saddled with all manner of debts, has been given a reprieve by a judge in Palma, the club able to raise nearly 17 million euros to cover its immediate obligations of some 13 million. Had it been unable to meet these obligations, the club would have been declared bankrupt. The club is, though, not out of the woods, as it owes 40 million, the main creditors including the tax office, social security and banks. Meantime, and on the field, Mallorca lost 1-0 yesterday in the Copa del Rey at home to Sporting Gijon.
Wednesday, July 20, 2011
MALLORCA TODAY - Bellevue hotel group bankrupt
The Hotetur chain of hotels, formerly part of the Grupo Marsans and now under Posibilitum, is expected to shortly be declared by a judge in Madrid to have entered voluntary bankruptcy. The chain includes the Alcúdia hotels Bellevue and Lagomonte.
Wednesday, March 09, 2011
MALLORCA TODAY - Hotetur bankruptcy petition
It has emerged that on 11 February, Hotetur, the hotel chain to which Bellevue and Lagomonte in Puerto Alcúdia belong, filed for bankruptcy with a Palma court that has yet to judge the admissibility of the petition. Hotetur was acquired from Grupo Marsans by the investment company Posibilitum in June last year.
Tuesday, November 30, 2010
Chain Reaction: Bankruptcies and non-payments
Spain's economic woes are receiving plenty of airing, but what about what is happening on the ground? The crisis is such that one has an impression that much economic life in Mallorca is all but grinding to a halt, brought about by a lack of credit, non-payments, negative cash flows and bankruptcies.
Businesses in Mallorca are caught in the chain reaction of the absence of liquidity in both the private and public sectors. Of the latter, those affected are suppliers to town halls and other governmental bodies and those linked directly to government agencies. Take chemists, for instance. Some had started posting notices to the effect that they could not supply prescriptions through the local health system because the health agency, IB-Salut, was not paying them. IB-Salut, and its problems have been known about for months, is another division of regional government, like the tourism ministry, so in debt that the government is having to bail it out. The government has at least sought to reassure the chemists and patients of the health system that prescriptions will be guaranteed.
The town halls, notorious as bad payers even in the good times, can typically take six months or more in honouring invoices. The Council of Mallorca has had to reach into its pockets to give the town halls some cash that they cannot otherwise raise because central government has imposed restrictions on their capacity to borrow and thus get into further debt.
It's not all bad news. One town hall, Alcúdia's, is being reimbursed by central government, following a protracted legal battle to get back IVA which was wrongly charged to its services agency, EMSA. The 600,000 or so euros that the court has so far agreed to could rise. In the meantime, the repaid IVA will help to clear debts the town hall has to suppliers.
If only all town halls or businesses could benefit from such windfalls. If only, especially for smaller businesses, there were mechanisms to prevent their bankruptcy when faced with what is an increasingly common occurrence, the protection of voluntary administration by larger businesses which then do not make payments while they buy time to try and sort out their affairs. For the smaller businesses, their suppliers, there simply isn't the time. And so they try and come to agreements with their own creditors or go bust and then find themselves blacklisted by banks.
The main business sectors affected have been construction, hostelry (in its widest sense, to include hotels as well as restaurants etc.) and transport. And there have been some big names that have got into difficulty. One of these is Marsans, formerly the ultimate owner, through the hotel chain Hotetur, of the Bellevue complex in Alcúdia. The sale of Marsans' businesses earlier this year looked as though it might have brought salvation. The problems have persisted, though the new owners seem to have arrived at a solution that will see creditors paid and so stave off a court order that was to place Hotetur in voluntary administration, one that creditors had not sought when urging the court to force bankruptcy in pursuit of the money they were owed.
Even if a solution is found, there is also the effect on local business confidence to be taken into account. In the case of the huge Bellevue, any uncertainty sets the rumour mill ablaze, one not helped by staff being paid only 70% of their October salaries (as was being reported in the middle of November). Just the threat of administration for a major employer and purchaser of services, to say nothing of supplier of tourists, is sufficient to drain even more life from the sick body of the local economy.
Lawyers have expressed concerns about the bankruptcy law which came into force in 2004. It was one, they say, drafted at a time when things were good and when bankruptcy was relatively uncommon. Since 2008 the trickle has become an avalanche. While voluntary status has its benefits for the company facing bankruptcy, it does little for suppliers.
One lawyer has described the system as an abuse of the law, and the overwhelming majority of companies that enter administration subsequently fail, some of them emerging later under new names with new owners, for example, a son or daughter, thus getting around the banks' blacklist. It has been said that the law makes it easy to simply close and disappear but also to get re-established in a different guise. And then perhaps to set the same chain reaction in motion, of smaller businesses, the suppliers, being left unpaid and ending up going to the wall all over again.
The chain reaction is likely to continue, likely to get worse. You can also describe the situation as a vicious circle, and the question is when or if the circle will be broken, because there is no sign of it being so.
Any comments to andrew@thealcudiaguide.com please.
Index for November 2010
Bankruptcies, non-payments and - 30 November 2010
Capdepera, new agriculture and - 13 November 2010
Catalonian independence, Joan Laporta and - 16 November 2010
Celebrity advertising, Rafael Nadal and - 3 November 2010
Chinese tourists - 24 November 2010, 25 November 2010
Christmas, spending and - 15 November 2010
Dunes in Can Picafort and Playa de Muro - 2 November 2010
Ensaïmada - 8 November 2010
Euro, Europeanism and Ireland - 23 November 2010
Facebook and tourism promotion - 4 November 2010
German versus British tourism - 9 November 2010
Golfers in Balearics, low number of - 27 November 2010
Graffiti artists face prison sentences - 28 November 2010
Guardia Civil and Catalan incidents - 18 November 2010
Hotel over-supply - 1 November 2010
Hunting - 11 November 2010
Inca hospital and patient information - 12 November 2010
Loneliness, expatriate - 5 November 2010
Mallorca identity and resorts - 22 November 2010
Muro employees paying salaries back - 25 November 2010
Playa de Palma regeneration - 20 November 2010
Pollensa and local tourism - 21 November 2010
Pope and Spanish secularism - 7 November 2010
Pumpkin, Muro fair and - 14 November 2010
RNE3, Siglo 21 and - 26 November 2010
Royal wedding (Kate and William) - 19 November 2010
Surnames and spelling rules, new - 6 November 2010
Tourism secretary-of-state and ministers - 29 November 2010
TripAdvisor and review sites - 10 November 2010
Underage drinking in Spain - 17 November 2010
Businesses in Mallorca are caught in the chain reaction of the absence of liquidity in both the private and public sectors. Of the latter, those affected are suppliers to town halls and other governmental bodies and those linked directly to government agencies. Take chemists, for instance. Some had started posting notices to the effect that they could not supply prescriptions through the local health system because the health agency, IB-Salut, was not paying them. IB-Salut, and its problems have been known about for months, is another division of regional government, like the tourism ministry, so in debt that the government is having to bail it out. The government has at least sought to reassure the chemists and patients of the health system that prescriptions will be guaranteed.
The town halls, notorious as bad payers even in the good times, can typically take six months or more in honouring invoices. The Council of Mallorca has had to reach into its pockets to give the town halls some cash that they cannot otherwise raise because central government has imposed restrictions on their capacity to borrow and thus get into further debt.
It's not all bad news. One town hall, Alcúdia's, is being reimbursed by central government, following a protracted legal battle to get back IVA which was wrongly charged to its services agency, EMSA. The 600,000 or so euros that the court has so far agreed to could rise. In the meantime, the repaid IVA will help to clear debts the town hall has to suppliers.
If only all town halls or businesses could benefit from such windfalls. If only, especially for smaller businesses, there were mechanisms to prevent their bankruptcy when faced with what is an increasingly common occurrence, the protection of voluntary administration by larger businesses which then do not make payments while they buy time to try and sort out their affairs. For the smaller businesses, their suppliers, there simply isn't the time. And so they try and come to agreements with their own creditors or go bust and then find themselves blacklisted by banks.
The main business sectors affected have been construction, hostelry (in its widest sense, to include hotels as well as restaurants etc.) and transport. And there have been some big names that have got into difficulty. One of these is Marsans, formerly the ultimate owner, through the hotel chain Hotetur, of the Bellevue complex in Alcúdia. The sale of Marsans' businesses earlier this year looked as though it might have brought salvation. The problems have persisted, though the new owners seem to have arrived at a solution that will see creditors paid and so stave off a court order that was to place Hotetur in voluntary administration, one that creditors had not sought when urging the court to force bankruptcy in pursuit of the money they were owed.
Even if a solution is found, there is also the effect on local business confidence to be taken into account. In the case of the huge Bellevue, any uncertainty sets the rumour mill ablaze, one not helped by staff being paid only 70% of their October salaries (as was being reported in the middle of November). Just the threat of administration for a major employer and purchaser of services, to say nothing of supplier of tourists, is sufficient to drain even more life from the sick body of the local economy.
Lawyers have expressed concerns about the bankruptcy law which came into force in 2004. It was one, they say, drafted at a time when things were good and when bankruptcy was relatively uncommon. Since 2008 the trickle has become an avalanche. While voluntary status has its benefits for the company facing bankruptcy, it does little for suppliers.
One lawyer has described the system as an abuse of the law, and the overwhelming majority of companies that enter administration subsequently fail, some of them emerging later under new names with new owners, for example, a son or daughter, thus getting around the banks' blacklist. It has been said that the law makes it easy to simply close and disappear but also to get re-established in a different guise. And then perhaps to set the same chain reaction in motion, of smaller businesses, the suppliers, being left unpaid and ending up going to the wall all over again.
The chain reaction is likely to continue, likely to get worse. You can also describe the situation as a vicious circle, and the question is when or if the circle will be broken, because there is no sign of it being so.
Any comments to andrew@thealcudiaguide.com please.
Index for November 2010
Bankruptcies, non-payments and - 30 November 2010
Capdepera, new agriculture and - 13 November 2010
Catalonian independence, Joan Laporta and - 16 November 2010
Celebrity advertising, Rafael Nadal and - 3 November 2010
Chinese tourists - 24 November 2010, 25 November 2010
Christmas, spending and - 15 November 2010
Dunes in Can Picafort and Playa de Muro - 2 November 2010
Ensaïmada - 8 November 2010
Euro, Europeanism and Ireland - 23 November 2010
Facebook and tourism promotion - 4 November 2010
German versus British tourism - 9 November 2010
Golfers in Balearics, low number of - 27 November 2010
Graffiti artists face prison sentences - 28 November 2010
Guardia Civil and Catalan incidents - 18 November 2010
Hotel over-supply - 1 November 2010
Hunting - 11 November 2010
Inca hospital and patient information - 12 November 2010
Loneliness, expatriate - 5 November 2010
Mallorca identity and resorts - 22 November 2010
Muro employees paying salaries back - 25 November 2010
Playa de Palma regeneration - 20 November 2010
Pollensa and local tourism - 21 November 2010
Pope and Spanish secularism - 7 November 2010
Pumpkin, Muro fair and - 14 November 2010
RNE3, Siglo 21 and - 26 November 2010
Royal wedding (Kate and William) - 19 November 2010
Surnames and spelling rules, new - 6 November 2010
Tourism secretary-of-state and ministers - 29 November 2010
TripAdvisor and review sites - 10 November 2010
Underage drinking in Spain - 17 November 2010
Subscribe to:
Posts (Atom)
