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The crisis on the construction sector

The crisis on the construction sector

These are times of uncertainty and disproportionate economic scarcity. The pandemic, the War in Ukraine… have been the “perfect” ingredients for the breeding ground of the enormous economic crisis that is now being experienced. One of the sectors strongly affected by this crisis is the construction sector. Due to the extraordinary and unexpected rise in the prices of certain raw materials, intermediate goods, energy and fuels, the high volatility of electricity prices and the difficulties in supplying certain essential products and materials. All of this is also affecting the Spanish economy as a whole.

Incidence in the Construction Sector

One of the star indicators for measuring the temperature of a country’s economy is its business fabric. A strong and expanding fabric is a sign of a thriving and consolidated economy. While a declining fabric is a sign of the opposite. And this is what we are seeing in Spain. There has been a very substantial increase in bankruptcy proceedings. Processes that are attended by those who cannot meet their ordinary obligations and need to resort to this procedure.

According to data from Iberinform extracted from the BOE that show that the construction sector, together with real estate, are the ones that are suffering the most from the crisis. A crisis that already came from before the invasion of Ukraine, but that has only gotten worse. Of the 21,382 dissolutions that have been carried out in Spain in the first nine months of the year, one in four corresponds to construction and real estate: 5,131, specifically. Of that amount, 16% (3,421) are from the construction sector, while 8% (1,710) are from real estate. In the month of September, there were 234 dissolutions in the construction.

Impact on the Otero Group

It has recently been heard in the press that one of those affected is the Otero Group. A major developer company, based in the Province of Malaga, and with more than 500 million in investments. Despite its size and prestige, it seems that it is also being dragged down by the current economic situation. Thus leaving dozens of clients who had ordered their real estate properties and who now find themselves without a home and without being able to recover their money, waiting that someone comes to rescue the projects and continue with the works.

The clients, many of them foreigners without contact with Spanish law, are completely unaware of the measures that can be carried out to defend their economic position in a situation like this.

Who can be affected by the crisis on the construction sector?

Individuals or companies that have begun the process of buying a new construction home marketed by companies such as Grupo Otero. Or, in general, foreign and national clients who have invested in the real estate sector and related companies are experiencing economic difficulties.

Suppliers and/or, in general, stakeholders in the sector in which they have worked for the Otero Group or similar companies.

How can it be affected?

Bankruptcy. In this type of process it is very common for the buyer to advance a part of the money from the sale. Thus, in the event of bankruptcy of the developer company, it may happen that the buyer sees that the works on his home are not progressing and that the company is not in a position to return the amount advanced and that it is in bankruptcy proceedings.

Modification of the conditions of the sale. It may happen that, due to the change in the economic situation, that the promoters ask them for an increase in the sale price alluding to the application of the ” rebus sic stantibus

Non-payment of invoices to suppliers. Suppliers or market operators who have provided services or materials to the debtor company. And who now have a credit against it.

Non-payment of loans (financing in general). Companies in the crisis of the construction sector have resorted, like those in other sectors, to the granting of financing. In a situation like the current one, non-payment of financing increases considerably.

How can we help from Lexidy ?

Bankruptcy. In the event of a bankruptcy, we would assist you both in the negotiation of a creditor agreement. But also as in the monitoring of the liquidation, negotiation with the bankruptcy administrator, accountability of the debtor’s managers…

Modification of the conditions of the sale. The application of the clause that allows the conditions of the contract to be changed is very exceptional. We will defend you against the builder who intends to take advantage of your ignorance of Spanish law to increase the price of the operation.

Debt claim buyers. If it is not feasible for the seller to comply, we help you to terminate the contract for non-compliance and recover the amount advanced. We are also experts in a deposit contract in case it has been signed.

Supplier debt claim. If you are a supplier of a construction company that owes you money for the services rendered, we can claim the debt both in the pre-trial phase and in the judicial phase.

Why is Lexidy different in the provision of its services?

– Most of our clients are foreigners. Therefore we fully understand the legal problems they face when they invest in Spain.

– We are an international firm with an international vocation.

– No two clients are the same. Beacause no two cases are the same, we know it and we make tailor-made suits for each one.

How Can We help you?

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