UGT's PSV: 20,000 families, bankruptcy and 25% lost

When UGT's housing developer went bankrupt with 20,000 families inside

What peine to the Promotora Social de Viviendas, the housing cooperative set up by Spain's UGT trade union? Founded in 1988 as a cooperative to build affordable flats for workers, it ended up suspending payments in December 1993, with some 20,000 families inside. According to the thread's account, the Ministry temporarily suspended the entity's governing bodies. Nicolás Redondo was leading the union at the time. Three decades later, the same organisation is calling protests over housing prices. We didn't come up with the irony: the newspaper archives did.

How much money did the PSV cooperative members lose

The final split is the best measure of the disaster. Of the roughly 20,000 cooperative members, about 13,000 stayed the course and received their flat, paying **7% more** than the agreed price, years behind schedule and with rent paid while they waited. The other 7,000 pulled out: they recovered **75%** of what they had put in and lost the remaining 25%. On paper it doesn't sound like a catastrophe. In practice, that 75% was refunded without interest years later, in pesetas that between 1988 and 1993 lost purchasing power at a rate of 5-7% a year, according to a calculation circulating in the thread. For those who contributed early on, the real loss would be closer to a third than a quarter.

Who paid for the housing developer's bankruptcy

The ICO (Spain's official credit institute) put in money, which explains why the outcome was less brutal than in other bankrupt cooperatives where members lost almost everything. In July 2001 the Audiencia Nacional (Spain's high court) convicted the developer's top executive of **misappropriation** and declared UGT civilly liable in a subsidiary capacity. The Supreme Court exempted it from paying in 2003, ruling that almost all cooperative members had signed out-of-court settlements. The auditor also bore some responsibility years later, as noted in the thread.

The peseta was devalued three times while the cooperative sank

The timing could not have been worse. Between September 1992 and May 1993 the peseta was devalued three times within the European Monetary System —by 5%, 6% and 8%, more than 20% accumulated—, and the last one came barely seven months before the payment suspension. The 1993 crisis sent flat sales tumbling just when the cooperative needed new income to plug the hole. On top of that, according to the thread, there were business ventures that had nothing to do with building homes: a travel agency and an insurance company financed with the cooperative members' instalments.

What became of the PSV and why the scandal was forgotten

Some cooperative members got out in time. One of them said in the thread that he withdrew his money just before the bankruptcy and lost **80,000 pesetas** — small change today, but a blow back then for someone who was "scandalously young". His development was to be built behind Canal 9, between Burjassot and Paterna, with plans for townhouses that, according to his account, were never built as such. In Spain one scandal buries the previous one, and this one has been buried for three decades. Meanwhile, the comparison hanging in the air: a three-year sentence for the manager of a mega-fraud versus fines of 200,000 euros for felling a tree or charges for placing a mobile home on rural land. The country, at times, borders on delirium.