Aifos, which was notorious for selling off plan properties before planning permission was granted, has outstanding debts of €7.9 million according to solicitors representing creditors.
They told the commercial court in Malaga that the three creditors are owned €540,000 but overall the company has much larger debts. Judge Enrique Sanjuan agreed that Aifos meets the objective conditions to start proceedings.
The move has serious implication for property investors who have not yet completed on their deals and could lose their money. If Aifos goes into administration buyers who are still waiting for a property from Aifos after making staged payments will have to join the queue of creditors trying to get their money back from the developer. Those without bank guarantees would be at the back of the queue.
The courts will now check with various banks to confirm whether Aifos has defaulted on its debts to them. It is reported that Aifos owes €200 million to Banco Popular and €33 million to Banco Pastor. The developer employs around 2,000 people.
In November the court rejected a similar request by another one of Aifos's creditors. Gestion de Obras y Reformas did not provide any evidence of other creditors and based its request on the assumption that Aifos would run out of money as a consequence of the bankruptcy of another Spanish developer, Grupo Tremon.
At the height of Spain's property boom Aifos opened offices in London and Manchester, and focused heavily on sales to British overseas property investors. Many of them may now be affected if the company is forced into administration.
Aifos President Jesus Ruiz Casado has also been implicated in Operation Malaya, a police investigation into municipal corruption and urban planning scandals.
