Tivoli Hotels & Resorts announced today that it is seeking protection from its creditors by applying for a Special Revitalisation Process (PER) for Tivoli Hotels and Marinotéis Hotels.
The request has been made necessary by a delay in the disposal of the hotel group which is part of the wider disposal of assets of Rioforte which is undergoing insolvency proceedings.
In today’s press release, Alexandre Solleiro, the Chief Executive of Tivoli Hotels, commented that he already has confirmation of the support of a financial institution, which is provided a line of finance for the company to fulfill its commitments "during this phase."
The PER will not affect the operation of 14 hotels in Portugal and Brazil and the measure, "aims to protect the businesses."
Alexandre Solleiro also sent a letter to the company’s trading partners which explains that the PER aims to get the Tivoli through short term constraints until all is back to normal.
The CEO believes that this procedure will allow the group time to pay off its debts as soon as possible and he hopes that the ongoing negotiations will have a positive outcome.
"In this difficult environment and to prevent the financial position damaging the operating activities of the Tivoli Group in Portugal, the management of Tivoli Hotels, SA and Marinotéis, SA decided to apply for a PER for these two companies in order to protect the interests of businesses, employees, customers and its creditors," reads the statement to creditors.
The President of Rioforte, Manuel Fernando Espírito Santo, confirmed that there are interested parties who wish to buy the hotel chain, but any decision is no longer in the hands of the company as it is insolvent.
The Tivoli Hotels process was submitted in Lisbon on December 26th, 2014 and the Marinotéis process was registered in Olhão court on the same day.
The PER is a special process created under Portugal's new Insolvency and Corporate Recovery Code that allows companies in difficulties or impending insolvency to negotiate with their creditors.
The intention is to revitalise the business without closing it down. Once a PER is introduced, actions against the company for debt collection are suspended.
Comments
Ed - if this is a new procedure, this is a classic example of Portuguese backwardness. Decades behind advanced countries.
But the reasons for not introducing this regulation are screamingly obvious. As part of the procedure the applicant must declare and prove to the courts satisfaction the extent and location of their remaining assets.
Vitally relevant is backdating and tracking any transfers in the last couple of years so as to catch those transferring assets to other family members or hiding assets amongst other businesses in a group.
Imagine one of the extended Espirito Santo clan - having been alerted since 2008 at the start of the crisis, so with ample time to 'hide assets' - applying for this procedure ?