* Gowex has up to four months to reach deal with creditors
* Ex-CEO and founder to appear in court on Monday
* Confusion over who owns the company
(Adds court ruling, workers statement)
By Julien Toyer and Andrés González
MADRID, July 10 Spanish wireless networks
provider Gowex, at the heart of an accounting scandal
that has hit Spain's reputation among investors, started
insolvency proceedings on Thursday, giving it four months to
reach a deal with creditors or face bankruptcy.
Spain's High Court also said it had charged the company's
founder and former chief executive Jenaro Garcia Martin with
three financial crimes: false accounting, distortion of economic
and financial information, and insider trading.
He was called to testify next Monday, when he is also due to
hand over his computer and his phone.
Gowex stunned investors and its workers on Sunday when it
said Garcia Martin had misrepresented the firm's accounts for at
least the last four years.
Until recently, the company had been hailed as an example of
Spain's ability to rebound from the worst economic crisis in
decades. Its stock value surged 22-fold in two years as it
expanded its wi-fi services globally.
Garcia Martin said on Sunday on his twitter account he had
made a confession to a court and was ready to collaborate with
the justice authorities. Reuters journalists saw him outside his
home in Madrid on Thursday. He declined to comment on the case.
In a document registered with the judge to initiate the
insolvency proceedings, Francisco Martinex Marugan, a Gowex
board member, and the company's lawyer Ricardo Urbina, said the
situation at the firm was one of "misgovernment, disarray and
A first round of talks with creditors and workers had
started, they said in the document obtained by Reuters.
A Spanish court source had previously told Reuters Gowex had
initiated insolvency proceedings on Thursday.
Under Spanish law, a company filing for such proceedings has
a maximum of four months to reach a deal with creditors or enter
into administration - a formal bankruptcy process in which a
judge takes over the company and appoints who should run it,
often leading to it being wound up or radically restructured.
Adding to the uncertainty surrounding the company, Gowex
workers issued a statement on Thursday saying they were not
aware of any insolvency proceedings.
The ownership of the company was also unclear.
Late on Wednesday, Gowex said Cash Devices SL and Biotelgy
SA, two vehicles used in the past by Garcia Martin to hold his
majority stake in the company, owned a combined 47 percent of
However, Biotelgy, a Luxembourg-based firm, was dissolved in
2012, according to court filings obtained by Reuters.
(Additional reporting by Emma Pinedo, Javier Barbancho,
Guillermo Martinez and Alicia Leon; Editing by David Holmes and