Isolux Corsán files for bankruptcy

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Tuesday, July 4, 2017

Spanish energy, construction and infrastructure concession group Isolux Corsán announced that it has formally applied for bankruptcy proceedings for the seven companies in the group, filing the communication foreseen under rule 5 bis of the Spanish insolvency act.

The decision was taken by the board of directors, which then submitted their resignation "in order to facilitate the administration of the company in this new stage," the company said in a statement.

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The seven companies affected are Isolux Corsán Group, Corsán-Corviam Construcción, Isolux Ingeniería, GIC Concesiones, Isolux Corsán Servicios, Isolux Corsán Inmobiliaria and Isolux Energy Investments.

These companies employ a total of nearly 2,000 people, 900 of whom are based outside Spain. However, they also have a total debt to suppliers of 405mn euros (US$460mn), while the group's entire financial debt was around 1.3bn euros as of the end of April, of which 557mn euros was associated with project financing.

Isolux Corsán stated that its main priority will be "maintaining as many jobs as possible, to limit the risks deriving from the guarantees in place and facilitating the continuity of the company through the projects that have so operative and financial viability."

The group also confirmed that it has received six acquisition offers for diverse productive units. "Several of them propose the absorption not only of the direct personnel of the works, but also of an important number of workers of the corporate areas," the statement read, adding that it will be the new directors and the bankruptcy administrator who determinate the approval of the offers.

ISOLUX IN LATAM

Isolux Corsán currently has several projects under development in Latin America, including initiatives in Peru, Brazil, Argentina, Nicaragua and Bolivia.

The full list (including completed projects) can be seen here.

However, the company has also been at the center of controversies in the region. Earlier this year, the Bolivian government decided to rescind Corsán-Corviam's contract for the Miguillas Hydro Plant, pointing to problems with construction.

Later, it was informed that the conglomerate was being investigated in Spain over allegations that it set up an international bribery network to obtain public works contracts in Africa and South America.

In the case of Latin America, Isolux's offices in Chile were raided in 2015 at the request of the local attorney general's office on suspicions of bribery and fraud related to a construction contract with the Universidad de Santiago, which ended up being cancelled.

Another bribery allegation was made in relation to the construction of a US$22mn overpass in Paraguay, although public works minister Ramón Jiménez has rejected the accusations.

Documents accessed by Spanish officials indicated that former company president Luis Delso allegedly advised making a US$1mn payment in Bolivia to help it obtain contracts.

Even before that, in 1999, a joint venture formed by Isolux, Icazur and Hidromecánica Extremeña won a contract to expand a water treatment plant on the Lempa river in El Salvador. However, it was later discovered that the manager of the joint venture had paid a US$2mn bribe to Carlos Perla, head of the national water authority.