Spain's Reyal Urbis files for insolvency

Spanish property firm Reyal Urbis has filed for bankrupcy protection after failing to renegotiate its €3.6 bn debt load.

Reyal Urbis is the latest property developer to fall victim of the country's property crash which has seen construction activity virtually grind to a halt and thousands of jobs shed in the industry since 2008.

It is also the second largest insolvency case in the Spanish property sector after the collapse of Martinsa Fadesa in 2008.

Reyal Urbis, 70%-owned by construction tycoon Rafael Santamaria, said it has been in talks with its banks for months in a bid to arrange refinancing of its debt in light of the 'continuing deterioration of the real estate market'.

In a press release, Reyal Urbis said it hoped to reach an accord, ‘given the good will’ of all the parties to the talks. The company's creditors include Santander, BBVA, Bankia, Banco Popular and SAREB, the bad bank created by the government to absorb toxic real estate assets from Spanish lenders.

Reyal Urbis had agreed a massive refinancing deal with a consortium of 50 banks in March 2010 but was forced to go back to the negotiation table for a new debt restructuring only 15 months later.

The initial deal envisaged a period until June 2013 in which the company would not pay interest or down payments. Reyal Urbis exchanged debt for around €400 mln worth of real estate as part of the deal.