Spanish property firm Reyal Urbis, which is drowning under a debt pile of over 3.6 billion euros, filed Tuesday for insolvency, the latest in a string of collapses of real estate firms since a property bubble burst in 2008.
It is Spain's second-biggest insolvency after Martinsa Fadesa defaulted on close to 7.2 billion euros ($9.6 billion) of debt in 2008, stranding thousands of unfinished real estate projects and helping to precipitate a banking crisis.
The company, born out of the merger in 2007 of Inmobiliaria Urbis and Construcciones Reyal, is one of Spain's biggest real estate companies.
Its orange, blue and white logo is associated with some of the most emblematic excesses of Spain's decade-long building boom.
Reyal Urbis is the main developer behind Valdeluz, a new city northwest of Madrid intended for 30,000 residents but that has remained a ghost town since the first buildings were inaugurated in 2007, on the eve of the financial crisis.
"These are the last violent upheavals of the crisis," said Robert Tornabell, finance professor at the ESADE Business School in Barcelona.
"This could be one of the last because almost all have already fallen."
At the peak of Spain's property boom, the country was building nearly a million new houses a year.
But when Spain's real estate sector finally imploded in 2008 as the global credit crisis squeezed banks and ended easy mortgage loans, building activity dried up and dozens of property developers went bust.
The housing slump has battered the Spanish economy, the euro zone's fourth-largest, sending millions of low-skilled builders onto swelling unemployment lines and undermining the banking industry.
Reyal Urbis' net loss widened in the third quarter of 2012 to 257 million euros from 136 million euros in the same year-ago period.
The company, led and owned by construction magnate Rafael Santamaria, announced in October that it had started talks with its creditors to refinance its debt.
But the talks proved fruitless, forcing the firm to announce Tuesday that it had sought protection from creditors.
The company's creditors include banks Santander, BBVA, bailed out lender Bankia, Banco Popular and SAREB, the so-called "bad bank" set up to purge soured real estate assets from the books of Spanish lenders.
Reyal Urbis owes 550 million euros alone to Santander, according to Spanish media.
The majority of banks have already provisioned the amounts they loaned the company, said Tornabell.
Reyal Urbis, whose main line of business is the development of first homes, had eight million square metres (86 million square feet) of land for development at the end of last year. It employs 420 people.
The company's total assets were valued at 4.1 billion euros at the end of June by global commercial real estate services company Jones Lang.
The company's stock market values has collapsed since Spain's property market went bust.
Shares in the company were being traded at 9.0 euros in June 2008 but closed at 0.124 euros on Monday, valuing the company at about 36 million euros.
Spain's stock market regulator CNMV suspended trade in Reyal Urbis shares on Tuesday due to "circumstances which could disturb the normal development of trade".
Spain is grappling with a double-dip recession with 26 percent unemployment.