Costa del Sol Property Blog » aifos

4 years for owners of Aifos

Andrew Belles — Fri, 17 Jun 2011 15:19:57 +0000

The Aifos owner, Jesús Ruiz Casado could face a prison sentence of four years for failing to return funds paid by buyers for properties on a development in Casares that was never built. Approximately 20 buyers, many of them foreign couples, were never refunded the sums of between 50,000 and 70,000 euros they paid towards properties on the Hacienda Casares development. Aifos is expected to have received more than 1.1 million euros in total. Construction was supposed to start in November 2004 but the development never materialised.

In its conclusions to the investigation the public prosecution department accuses Ruiz Casado, and his wife, Teresa Maldonado, of wrongful appropriation and calls for a four year prison sentence for both of them. The private prosecution accuses the defendants of fraud in addition to wrongful appropriation and asks for sentences of eight years each.

According to the public prosecution the sales contracts specified that deposits paid would be returned with the corresponding interest if the dates for the start and completion of the project were not honoured. If the developers had opened an account for the funds for other things, he would have been able to pay them back” explains the prosecution.

Representing the buyers, the private prosecution claims that the buyers signed their contracts and fulfilled their financial obligations “under clear and evident deceit, as they were led to believe that the development was being built”.

“There wasn’t even planning permission” say the legal representatives of the buyers, stressing that there is evidence of fraud. Both public and private prosecution call for the funds to be returned.

Source: Sur in english print edition 17th to 23rd of June 2011

Administrators produce first aifos report

Andrew Belles — Fri, 26 Mar 2010 13:20:09 +0000

The administrators who took over the accounts of the firm Aifos last july have released a preliminary report. In this they name some 6,234 creditors who are owed debts that amount to more than 884 million euros.

However at this stage the list of debts does not include the amounts paid as deposits by the majority of the property buyers who put in a claim to the administratos. Instead these sums are classed as contingent credits subject to the fulfilment of the contracts. A large number of affected clients have responded by contesting this initial adminsitratior’s reports on the grounds that they feel “seriously damaged”. Some even interpret this as a strategy to “get us out of the way”.

The administrators explained that, in the case of the clients who had given money to Aifos towards the purchase of a property, they had considered them as creditors, but with contingent credits, as “if the contracts (to buy the houses) have not been terminated or there is no court ruling that they must be settled, the credits are not liquid, expired or demandable”.

Patricia Morales is a lawyer who represents some of the affects buyers. She explains that given the large stock of unsold properties it is “suprising” that millions of euros handed over by thousands of buyers are not shown in the report.

She added that the report fails to say whether these amounts paid by clients are guaranteed or, if they have been paid to cover VAT, whether the money has been handed over to the taxman.

The buyers find it hard to believe that the amounts have been classed as contingent credits on contracts subject to being fulfilled by Aifos when a large number of allegedly illegal developments have been halted by a court, which implies that it is highly unlikely that the contract is ever going to be complied with.

“Aifos has already failed to honour the contracts and what the clients want is their money back. This almost seems like a strategy to get us out of the way”, said the lawyer.

Morales has called for a further study of all property sale contracts, taking into account whether or not they were legal, whether the amount paid were guaranteed, how much was handed over and paid into restricted accounts, as well as whether money paid to cover VAT was passed on to the tax collection agency Hacienda.

Source: Sur in English, March 26th to April 1st 2010 author: Montse Martín

Taking Aifos to Court

Andrew Belles — Mon, 28 Sep 2009 13:07:53 +0000

As it is already well known, since 23rd of July the AIFOS Bankruptcy has initiated a new chapter in this creepy story. The situation was foreseeable as the reputation of this company was well known. Aifos commercialized developments at very competitive prices and had very good marketing strategies. They did not have building licenses, sometimes they were not even owners of the land, and in the majority of the occasions they did not grant the bank guarantees ordered by law nor did they deposit the monies received in a special bank account as established by law. How could they keep this behavior for years should be a matter of a deep and serious study. The financial crisis and the sudden end of the property market boom provoked this predictable end.

Most of the victims of AIFOS already carried out a long relation with the company; phone conversations with the employees of the company, attempts to cancel contracts due to endless delays in completions, judicial process, appeals, enforcement orders etc…

At the end of all this track of tears, the bankruptcy proceeding is requiring more money and the perspective to recover something seems each time more unlikely. Is it worth getting involved in the Bankruptcy?

First problem appears to be a new Legal Fee from your Lawyer. When approaching your lawyer your first question will be: Do I have any chance to get back my money? It is more than natural to ask it, but it is a tricky question for the lawyer. The lawyer will have to face a double dilemma:

If he tells you that nothing can be done and that the best option is to give up, he will be responsible if other creditors,, that would have filed the credit, recover any monies. If he tells you that the perspectives are good he would lie. What do they do? They recommend you to file the credit in spite of the fact there is little hope of getting back a Euro.

It seems nonsense but at this point nobody knows if it is worth the action to file the credit. The unique information that the lawyers have are those news telling that there is a debt of more than 1000M Euros, being the assets of the company less than a fourth of the said monies. They also know how difficult it is to search for Aifos’ goods. On the other hand if the number of creditors giving up their credits is high, the chance for those who will file the credit will become higher.

Lawyers in Spain follow the Official Legal Bar Fee’s. According to these fees a bankruptcy proceeding is charged as a standard proceeding, therefore a percentage around 8-9% is applied over the monies at stake. In this case credit against the debtor. These fees are official but for guidance only, if there is an express agreement stating otherwise, lawyers are allowed to reduce their fees.

Do you really need a lawyer to file the credit? Formally you do not. The filing of the credit does not require by law the representation of a lawyer and a court agent. In fact, the law it is quite vague about its content. The communication should state; name of the creditor, amount of the credit, alleged qualification for the credit, and the original documents justifying its origin. The bankrupted had to communicate a list of creditors to the court while applying for the bankruptcy. Putting together this list with the credits that had been communicated by the creditors, the judicial administrators will issue a creditor’s list.

The filing of the credit and the formal appearance in front of the court represented by a lawyer and a court agent will have to be done in two separate documents and are independent actions. The filing of the credit is limited to the 30th of September, later you will be able to communicate your credit but it will be qualified as subordinate credit, the end of the queue. On the other hand you can designate a lawyer and a court agent to participate at the process whenever you want.

Therefore, what is the aim of using a lawyer? The filing of the credit is more difficult than it seems. You have to argue a qualification for your credit, you have to keep clear that you have a credit; (it is not the same to be pending to complete a purchase than to be involved in a judicial procedure against the developer for the refund of the monies, or to hold a promissory note against AIFOS).

It is recommendable that a lawyer will check the nature of your credit, its amount, interests and the documents to be attached. But it is one thing to communicate the credit and another to participate in the bankruptcy process. To do so, you need to be represented by a lawyer and a court agent, otherwise you will not have any communication from the court regarding the running of the process, you will not receive the judicial administrators report, you will not be able to chase any judicial decision about your credit or your contract and you will probably get lost at the creditor’s meeting at the end of the process.

The bankruptcy process is a very long process, usually years, very complex, and with a enormous amount of documentation to be analyzed, received and sent. If the process finishes with an agreement to pay, it will include a reduction and a deferred of the debt. A survey for years will be needed. Also the liquidation of the assets of the company and its distribution will require attending more creditor’s meetings as well as lots of working hours.

Moreover the Bankruptcy Act is relatively new, and there are a lot of uncertainties still pending to be solved by the High Court. Therefore it is not a “cushy” job for the lawyer. Even in the case that your lawyer will make the effort to reduce his fees, court agents do not usually bargain their official fees.

Finally to decide whether you should intervene actively in the process or whether you should give up. The main point is to analyze your credit from a financial point of view. It is recommended to participate, if you are in one of the following categories:

1º If you have a bank guarantee even if it has expired.

2º If you are pending to complete a property bought years ago and almost finished and the price is still attractive.

3º If you have a court resolution in your favor or you are already involved in a judicial process.

Antonio García
Senior Lawyer
Abogado
ELS International Lawyers

Tel: (+34) 952 663 638
Fax: (+34) 952 477 953
Mob: (+34) 670 226 961
Email: antoniog@elslegal.com
Web: ELS Lawyers

Edificio Astigi I,
Bajo, Local 2 y 3,
C/Alberto Morgenstern,
29640 Fuengirola,
MALAGA. España.

Bankruptcy proceedings for Aifos

Andrew Belles — Tue, 20 Jan 2009 13:13:30 +0000

According to the Spanish newspaper ‘El Pais’ the Spanish developer Aifos has been forced into administration proceedings by creditors.

It appears that 2 suppliers who are owed just under 400,000 Euros by Aifos, asked the courts in Malaga to put the company into administration, and the court has agreed to start proceedings.

If the courts decide to put Aifos into administration, people that have bought Aifos off-plan properties that still have to complete will have to the growing list of creditors trying to get their money back from Aifos.
In a previous article (How the mighty have fallen) Gestión de Obras y Reformas started proceedings against Aifos, but did not supply enough evidence to the courts

If you have bought an Aifos property, contact you lawyer now. As an unsolicited creditor you will not be given priority in regards to returning of funds, so the sooner you start, the better you chances will be in at least getting you original investment back.

On a more positive note to you creditors, Aifos owns several hotels in Marbella, these assets would be sold to help pay all outstanding debts.

If anyone who reads this is has bought an Aifos off-plan and is trying to get their money back please leave a comment to help others in a similar situation.

Good Luck
Andrew Belles

UPDATE ARTICLE: Taking AIFOS to court

How the mighty have fallen

Andrew Belles — Tue, 25 Nov 2008 17:05:35 +0000

According to the Spanish press, Aifos a developer known for such projects as Terrazas de Torreblanca and Las Caballerizas, has been forced into receivership by one of its creditors!

It appears that Gestión de Obras y Reformas SL, one of the developer’s suppliers and creditors, started bankruptcy proceedings against Aifos within the last few days in a court in Malaga. Considering the timing, I would guess that the bankruptcy proceedings have started due to the recent failure of the Spanish developer Tremon.

To date, the company is reported to have 850 million Euros of debt, of which Banco Popular is its largest creditor, reportedly owed 200 million Euros, followed closely by Banco Pastor at 150 million Euros.

This could not have happened to a nicer developer. Based in Marbella, Aifos is notorious for illegal building projects, many of which still have not been resolved, and has been repeatedly accused of unethical conduct by many of its clients.
The owner of Aifos, Jesus Ruiz Casado and his MD were arrested in 2006 over the suspicions of bribing municipal authorities.

Many of its clients have also been kept in financial limbo. Buyers are still waiting on properties up to 7 years after they made stage payment and have little to show for it. These are the people that need help now, and with luck it is hoped that there will be a way for them to recover the monies they put down so long ago. If you have bought/buying an Aifos property, contact your lawyer and get them to keep track of proceedings as there will only be a limited period to make the claim.

Regards
Andrew Bellés