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Debtwire Latin America Court Spotlight June 2023

by Arthur Almeida, with RDB charts by Jayjeet Sharma

Last month, Chile-based salmon farmer Nova Austral commenced a reorganizacion concursal proceeding under its home country’s bankruptcy law to restructure USD 559.7m-equivalent in claims, most of which (USD 415.5m, or 76.37%) relates to bond debt, for which Nordic Trustee serves as the trustee for two series. The Civil Court of Porvenir, Chile, was expected to decide whether to admit the bankruptcy protection request for review in July. 

Source: Debtwire’s Restructuring Database

Brazil-based outsourcing provider Atento reached an agreement with its bondholders, instead of filing a scheme of arrangement with a UK court. 

The US court handling the Chapter 11 process commenced in 2020 by Chile-based Latam Airlines accepted the company’s arguments that the reorganization plan was substantially consummated and closed the case. Also closed was the Chapter 15 recognition proceeding filed in 2018 by Mexican oil driller Oro Negro.

Source: Debtwire’s Restructuring Database

June also saw certain creditors of Brazilian electricity distributor Light SA appealing the admission of the bankruptcy protection request made on behalf of the holding company of the group, which came along with an injunction to extend the automatic stay to Light Servicos de Eletricidade (SESA) and Light Energia, the affiliates prevented by the law from filing for bankruptcy as they hold energy concession agreements with the government.

Other significant appellate-related news last month included (i)  Credito Real creditor Monex’s constitutional relief appeal being denied by the 8th Federal Court for Civil Matters in Mexico City; (ii) the appeals against the recognition of certain AlphaCredit subsidiaries being admitted by the 1st Federal Bankruptcy Court in Mexico City; (iii) a Rio de Janeiro appellate court granting an injunction in favor of Brazilian retailer Americanas SA creditors, to allow the appointment of a watchdog for the case, at the company’s expense; and (iv) a Sao Paulo appellate court ruling in favor of several plan appeals filed by Coesa (formerly OAS) creditors, leading the company to be declared insolvent and have its judicial recovery converted into a liquidation proceeding. 

In terms of asset sales, an auction process for Mexican low-cost airline Interjet's assets valued at USD 98.2m was authorized by Mexican arbitration board JFCA and scheduled for 3 July (see Court Calendar below). In addition, construction conglomerate Novonor (formerly Odebrecht SA) received offers for its stake in Braskem from Unipar Carbocloro, Adnoc and Apollo Global Management, as well as from Brazilian conglomerate J&F Investimentos. Meanwhile, Credito Real sold its 70% stake in Costa-Rica based Instacredit to Gabriel Sragovicz, the founder of the Central American non-bank financial institution, and Oi SA obtained the court’s approval for the sale of its stake in Timor Telecom.

Source: Debtwire’s Restructuring Database

June was marked by several significant developments in the bankruptcy process of Brazilian telecom services provider Oi SA. In addition to the authorization for the asset sale noted above, the judicial managers tasked with assisting the court throughout Oi SA’s case submitted a proposal for bondholders and ECA creditors to individually vote on the plan, rather than being represented by their respective agents. The court also appointed a new judicial manager to work on the case, and the company received the first tranche of debtor-in-possession financing, with a second tranche being expected for July.

Source: Debtwire’s Restructuring Database

Other court developments of interest last month involving Latin American distressed companies include TV Azteca bondholders challenging the Mexican media group’s motion to dismiss the involuntary US Chapter 11 case, arguing that the company was in fact attempting to avoid the US jurisdiction and ignoring its liabilities under New York law-governed contracts. The company may file any reply in support of its motion by mid-July, and a ruling on the matter is expected for late August (see Court Calendar below). Last month also saw Grupo Famsa subsidiary Promobien ordered into liquidation.

 The months ahead