The pre-packaged sale and reorganization of Room Mate, S.A. was approved in less than a month within the framework of a reorganization tool under the Spanish bankruptcy act.
Madrid, Spain | July 28, 2022. Kepler-Karst (the “Firm”), a leading law firm specializing in restructuring and insolvency proceedings, has advised Room Mate, S.A. (“Room Mate” or the “Company”) on its reorganization and the sale of the business as a going concern.
This transaction involved a pre-packaged reorganization and sale of Room Mate's hotel business and its management companies to Angelo Gordon and Westmont Hospitality Group.
Room Mate filed for reorganization on June 24, 2022, and the Commercial Court No. 14 of Madrid recently approved the transaction. The legal strategy deployed by Kepler-Karst supported the expedient execution of this transaction, which was necessary given the highly distressed financial situation of the Company, as the Firm developed a solution for the continuity for the hotel business along with the request for a voluntary reorganization.
Armando Betancor, leader of the Kepler-Karst team that worked on this transaction, stated, “The success of this strategy was due in large part to the pre-planning process, which allowed us to provide the necessary guarantees so that the Insolvency Practitioner and the Judge could act quickly and on solid ground. As experts in restructuring and insolvency proceedings, our role has been and continues to be to seek solutions and viable alternatives that help businesses in situations like this one."
Some key steps in the pre-planning process included (1) the identification of the best possible buyer of the business unit – which included a commitment to preserving the jobs of the Company’s current workforce – through a process carried out by Kroll, an independent and highly reputable firm in the market; and, (2) once the buyer was identified, Baker Tilly – a leading international accounting firm – valued the business unit as a going concern, as well as what it could have been in a liquidation scenario, to verify that the offer received was reasonable within the expected parameters. All of this contributed to ensuring the legal security and independence of the process.
Luis Barber, partner at Kepler-Karst, said, "This is a clear example of how bankruptcy proceedings, filed in a timely manner and along with a well-prepared offer for the purchase of the business unit, can support the continuity of a company.”
Davinia Sanchez, partner at Kepler-Karst, added, "We could not be prouder of the work done here and of having helped a business in a sector that has faced pandemic-related challenges in recent years. The pre-planning work, the identification of potential buyers, and the development of a valuable and independent proposition were key."
Rodrigo Olivares-Caminal, Counsel at Kepler-Karst and expert in financial distress situations, stated, "This transaction demonstrates the importance of knowing the global legal context. In this situation, the process was aligned with the tools available in the best global insolvency legislations, such as the schemes of arrangement or the pre-packaged administrations in the UK or the sub-rosa sale in the U.S., allowing for an expedited sale of the business as a going concern."
The Kepler-Karst team that worked on this transaction was led by Armando Betancor, together with Luis Barber, Davinia Sánchez de la Cruz, Rodrigo Olivares-Caminal, Ana Carpintero and Guido Demarco.