What A Tangled Web: Orizonia and Marsans

Next month, a judge in Palma will make a decision as to the nature of the bankruptcy that brought down the Orizonia travel group in February last year. It may be that the judge considers administrators and certain shareholders in the company responsible for its collapse and orders the forfeiture of their assets. Two major creditors plus a group of more than one hundred former employees have been pressing for such an outcome.

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.

MALLORCA TODAY - Bellevue to be split into two hotels?

The ongoing judicial saga relating to the financial and administrative affairs of the Hotetur hotel chain and its wholly-owned management company White Horse has taken a new turn, one that specifically relates to the giant Bellevue complex in Puerto Alcúdia.

An agreement appears to have been reached between the Blue Bay group (Al Andalus Management) which is currently running Bellevue and the Luabay hotel division of the Orizonia travel group.

Orizonia has been pressing its claims on Bellevue. These relate to a debt owed to Orizonia of 40 million euros that had been taken on by the previous owners of Hotetur, the now defunct Group Marsans, and for which Bellevue was the guarantee; Hotetur was acquired by the investment group Posibilitum, now the ultimate owners of Bellevue.

A resolution, in the form of the proposed agreement which seems likely to be accepted by both the receivers for Hotetur and the judge overseeing the case, will see Blue Bay and Luabay jointly run the Bellevue site. Moreover, it is understood that documents have been lodged with the Balearic Government's tourism ministry which would enable the complex to be split into two "hotels", albeit that the use of the word hotels is somewhat misleading, given that Bellevue is a series of individual blocks of apartments.

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.

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.

MALLORCA TODAY - Bellevue debt at 80 million euros

The Bellevue hotel and complex in Puerto Alcúdia is attracting most of the debt that has been accrued by the hotel chain Hotetur. Acquired by the Posibilitum group last year as part of the sale of assets of Grupo Marsans, Hotetur is still in difficulty, with some 100 million euros of debt hanging over it, 80% of it Bellevue's. The hotel remains the subject of a legal dispute with the Orizonia group which had a mortgage over the hotel as a guarantee for debts run up by Marsans. Bellevue is due to open on 1 April.

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

Marsans Sold For Six Hundred Million Euros

The troubled travel concern, Grupo Marsans, has been sold to a company called Posibilitum Business. This is controlled by a Valencian businessman Ángel de Cabo who is involved with the real estate market in the Valencia area and has a reputation for taking on companies in difficulty.

Included in the sale is, of course, Hotetur, the hotel chain of which Bellevue (and Lagomonte) are a part. With the sale, one would imagine that rumours as to Bellevue's future should subside. Nevertheless, it will take a while to see how the new owners tackle the problems that surround Marsans. Typically, businesses that specialise in taking over companies in distress look to reduce costs as a means of extracting profit, slimming them down with the possible intention of selling them on at a later date. The exact strategy for Marsans, and therefore for Hotetur, is not known as yet.

The Rumour Mill: Bellevue

Rumours. It was the regularity with which rumours surrounding Bellevue in Alcúdia surface that was one of the reasons why I spoke with the assistant director last year. Rumours are always circulating about Bellevue. Unfortunately, the contact is no longer there, but even were he it is doubtful that I would get far in asking a question about the current rumour that's doing the rounds - that Bellevue will not be open next year.

There have been previous rumours along these lines, and they have all proven to be false. What is fuelling the current one is nothing directly to do with Bellevue or indeed Hotetur, the chain which operates the hotel. It has to do with the financial problems at Grupo Marsans, the ultimate owner of both Hotetur and the hotel complex. I have referred to these problems before, both here and in "Talk Of The North". Marsans faces demands from creditors, one of which is the travel group Orizonia. A guarantee against a debt of some 40 million euros is Bellevue. Orizonia is demanding payment of this debt and the execution of its mortgage on Bellevue.

It is from this, one assumes, that the rumours are stemming. In the reports of the court hearings into Marsans and its difficulties, there has been nothing about Bellevue closing. The rumours would appear, as so often, to be the result of taking facts (and one can't even be sure that facts are being taken) and moulding them into something without any basis in truth. I have asked people about the sources from which they have heard about Bellevue's alleged closure. They go along the lines of someone who spoke to someone in a bar near to the hotel.

Bellevue stands on some 200,000 square metres of prime real estate in Alcúdia. It can, at a stretch, accommodate 6,000 guests. Orizonia, as with many a hotel or travel group, would love to get their hands on it. It has a hotel division that was created in 2008, into which Bellevue might well fit, though if you go to the website - http://www.luabay.com - and read the over-the-top narrative about how they will "seduce" you, you might be forgiven for thinking that Bellevue might not fit after all.

Of course, there is also a question as to quite how well Bellevue (as with many other hotels) is shaping up under the current difficult circumstances. But this is a separate issue. One finds it hard to believe that there is substance to the rumours.


And who knows, maybe a "new" Bellevue might become the destination for the much-longed-for Russian tourist market. President Antich has been in Moscow, wooing tour operators and predicting that Russia will become the third most important foreign market for Mallorca and the Balearics after Germany and the UK. Germans do not go to Bellevue in huge numbers, which is probably as well. You think there might be a bit of British-German antagonism, well according to some of my German sources this is nothing compared to that which exists between the Germans and the Russians. Hey ho, perhaps it's as well that Russia aren't in the World Cup.


Any comments to andrew@thealcudiaguide.com please.