Dr Deliar digs himself in deeper: assets and liabilities and those flats at Mgarr in Gozo

Why did HSBC Bank force him, his wife and their fellow shareholders in the Mgarr flats company to sign off on a deed of constitution of debt to the tune of €7.2 million? Precisely because they HAVEN’T paid their debt and the bank had become gravely concerned that it would never see its money.

Here are some more details that I haven’t reported yet. Though the original loan approval was for €12 million, they ended up getting only €8 million of that, and used it to buy the Mgarr Bay hotel and raze it to the ground. They then had no money with which to actually build the flats and the project has ground along from hand to mouth for the last 11 years.

In 11 years, and with most of the flats sold already, they have only managed to pay back €1 million of the €8 million capital they owe the bank. They were only managing to pay the €1,600 DAILY interest on the outstanding sum, and when they ceased even to meet the interest payments and there was no sign of the capital repayments being made, HSBC Bank forced them to sign a deed of constitution of debt one month ago, which they hoped to keep secret because it does not have to be registered as it contains no new hypothecs.

The bank has agreed to hold off on the daily interest of €1,600 for 18 months from that date, giving them a breathing space in which they are supposed to sell ALL the remaining flats – there are around 15 – following which it will foreclose and seize assets in an attempt at recouping the money owed to it. The bank does not need to go to court to get a ruling on the money owed because the deed of constitution of debt is sufficient basis for a judicial auction (which is when debtors’ assets are forcibly seized and sold in the Courts of Justice at the request of creditors).