Espirito Santo At Plateau Saint-Esprit: The Destiny Of The Portuguese Family Empire In Luxembourg

During the second half-year of 2014, no less than five entities of the Luxembourg holding structure of the family controlled Banco Espirito Santo Group have had their fate in the hands of the judges of the Luxembourg District Court sitting in commercial matters located at the Plateau Saint-Esprit in Luxembourg-City and in the end, have all been declared bankrupt by the said Court.

The present article aims at providing a chronology of the relevant procedural steps from a Luxembourg viewpoint, after having rayed the structure in Luxembourg as it was operating prior its collapse.

Inside the Luxembourg holding structure of Banco Espirito Santo Group

Until the developments described hereafter, the Banco Espirito Santo conglomerate was considered as the second largest Portuguese banking private group by total reported net assets, being present in four continents and 25 countries and employing almost 10 000 people.1

As indicated before, five Luxembourg entities of the Banco Espirito Santo Group, considered as mainly constituting the holding structure of the core banking business of the said Group, have been declared bankrupt within the last six months.

While the cascading Luxembourg ownership structure, qualified as "convoluted" at some stage, has never been officially disclosed, it is considered as being topped by Espirito Santo Control S.A. ("ESC"), a Luxembourg public limited company founded in 1976.

Beneath ESC can be found Espirito Santo International S.A. ("ESI"), the second Luxembourg entity in bankruptcy, at the level of which material irregularities have been discovered that have been considered as the starting point of the collapse.

ESI is the sole shareholder of Rio Forte Investments S.A. ("Rio Forte"), the third bankrupt entity, holding a significant portfolio of assets by operating in real estate, tourism, agriculture, energy, health, and other business areas worldwide.

By vertical order, Espirito Santo Financial Group S.A. ("ESFG") is the fourth Luxembourg entity that has been declared bankrupt by the Luxembourg Court, and in which Rio Forte holds an indirect stake of approximately 49 percent. Moreover, ESFG owned around 25% in Banco Espirito Santo ("BES"), the Portuguese bank forming the core entity of the conglomerate that was split up, after a rescue package put together by the government and central bank, into a "good bank" (Novo Banco) holding sound assets and capitalised with state money, and a "bad bank" (BES) in which...