The 'dissolution' of the Otero Group: bankruptcy administration and million-dollar claims

“On the contrary, and despite the news that appeared in the press, we do not need to go to a pre-bankruptcy process, the main objective of this company being to continue with all the projects in progress”. Approximately four months have passed since the CEO of the Otero Group, Rubén Otero, sent this letter to his clients and just a couple of weeks ago the Mercantile Court number 2 of Malaga declared the bankruptcy that confirmed the collapse of this company specializing in the construction of luxury homes.

According to the order issued on May 23, and to which El Confidencial has had access, the “dissolution” of the company and “the cessation of its administrators” are agreed, which are “replaced” by a bankruptcy administration.

The resolution reflects that the procedure “has been urged by the debtor himself”, who “has initially requested the liquidation”; and it is highlighted that “the suspension of the exercise of the powers of administration and disposition of his assets” is agreed..

The administrators, attorneys-in-fact and representatives, “in fact or in law”, of the Otero Group have the duty to appear before the judicial authority and the bankruptcy administration “as many times as required”. They are obliged to “collaborate and inform” in everything “necessary or convenient” for the interest of the contest, “making the corresponding books, documents and records available to the Competition Administration.”.

This obligation, agrees the judicial authority, extends “to the positions of the debtor company that would have been in the two years prior to the declaration of bankruptcy”.

The creditors, for their part, have one month, counted from the publication in the Official State Gazette (BOE) of the court's decision, to communicate their claims to the construction company to the bankruptcy administration; while the report prepared by the designated administrators must conclude within a period of two months.

The order also states that the situation of the Otero Group must be reported to the State Tax Administration Agency (AEAT), the General Treasury of Social Security (TGSS) and also the Salary Guarantee Fund (Fogasa)..

record numbers

The company entrusted its “restructuring” to a law firm that announced the “development of future viability plans” to try to contain creditors. Suppliers of materials and services, as well as clients, who began to advise me legally to take action in court.

In a letter sent to those affected, a significant percentage of SMEs in the construction field, they were summoned to a meeting —in person or by videoconference— in which they will be informed of “concrete proposals”.

The legal representatives of Otero Builder SL, the company with which in 2017 the group began to take shape that later formed five companies —OBC, Otero, Lagoom, Urbatech and Atrium—, began a “restructuring” of the company that has already been “ duly” communicated to the Commercial Court of Malaga.

The objective was “to save the declaration of bankruptcy in the face of the insolvency situation directly caused by the extra costs in the work”. As in other previous communications, they resorted to the current situation to justify their sudden fall, although they always ignored that events such as the increase in material prices, inflation and the conflict in Ukraine have severely influenced the sector for more than a year. anus. However, they did not prevent the company from continuing to bet on an expansive management, without contracting spending, throughout 2022. To which we must add that the company itself reported that it had exceeded 500 million in business volume and in its own information channels they advertised record figures..

Grupo Otero presented itself as “the leader in the construction of luxury homes on the Costa del Sol”, they were very important. “More than 130 million euros in portfolio of works”, “190 units” of exclusive houses for “250 million”, “500 projects delivered” and the “objective” of building more properties for “affordable rentals”.

returned promissory notes

“Who could have guessed what has happened?” Asked the owners of one of the supplier companies, which is facing a possible non-payment of 1.5 million euros. “We had been working with them for more than seven years and we had never had a problem. Only last year, in a dozen works”, they insisted, to emphasize their astonishment at what happened, saying that “we have collaborated on very important works”.

They told this newspaper that on January 25 they should have paid promissory notes for 370,000 euros, but that the payment obligations were returned by the bank, a circumstance that also happened to them in December. “Then they told us that there had been a setback, not to worry and that it would be added to the amount that they would have to pay in February”. But when the second non-payment aroused suspicion and they again asked for explanations, the answer worried them even more: “They said there had been financial problems.”.

The rumor mill around the alleged bankruptcy of the firm grew, as did the complaints from the businessmen consulted, who I know complain about the lack of information from the Otero Group. “You call and nobody knows anything”, pointed out one of them. Four months later, on the windows of the company's main headquarters in the capital of Malaga, located on the Alameda Principal, hang “for rent” signs..

Clients with half-built and undelivered houses also received letters in which the firm urged them to renegotiate the purchase amounts, arguing that “the evolution of the prices of raw materials and energy is difficult to predict, and transcends the sphere of purely economic towards geopolitics”, for which “it has led to an increase in inflation globally from mid-2021 to 2022.

“In application of the fourth clause of the contract —which is not described in the letter sent in this case—, relying on the doctrine of the Supreme Court and the principle of 'rebus sic stantibus' —legal figure that establishes that an agreement will be in force as long as the initial conditions are maintained—”, affirmed the CEO of the company, who defended his position to apply an increase in the price of luxury homes.

And in this context of the collapse of the company, its employees were informed that it was starting an Employment Regulation File (ERE) that entailed a “collective dismissal” given their “absolutely unsustainable” situation.