• Secured creditor options include 80% haircut; unsecureds face 90%
• Plans to sell non-core assets through ‘UPI ‘special purpose vehicles
• Seeks DIP of unspecified size for working capital and extraconcursal obligations

BMG Foods, Frigorífico Concepción’s (FriCon) Brazilian subsidiary, has submitted its debt restructuring proposal in court, according to documents filed 16 October.

The debtors said the restructuring would be implemented through debt reprofiling, asset sales conducted through UPIs (a special-purpose structure free of charges and liabilities which is often used to sell assets in relation to an in-court restructuring) and a debtor-in-possession (DIP) facility.

The plan was submitted in the judicial restructuring case pending before the First State Business Court for Insolvency of Curitiba, in the state of Paraná.

For secured creditors (the so-called class II), the company is proposing an 80% haircut, to be paid after a three-year grace period. Credits would be repaid over 10 years, in monthly installments, with interest of 1% per year plus the Taxa Referencial (TR) benchmark.

Unsecured creditors (class III) with claims of up to BRL 30,000 (USD 5,902.50) would be paid in 12 monthly installments without a haircut after the plan’s confirmation.

Unsecured creditors holding larger claims could elect to receive BRL 30,000 under an alternative settlement that would discharge the remaining balance, or otherwise receive 10% of their claims (a 90% haircut) following a three-year grace period and repayment over 10 years, in monthly installments, adjusted by 1% annually plus TR.

Labor creditors (class I) would be paid up to 150 minimum wages within 12 months of plan confirmation. Larger amounts would be repaid according to the second option offered to unsecured claimholders.

Microenterprise and small-business creditors (class IV) with claims up to BRL 6,000.00 would be paid in 12 monthly installments without a haircut.

Holders of larger claims in this class could elect to receive BRL 6,000 in exchange for releasing the balance, or receive 30% of their claims after a 36‑month grace period through 120 monthly installments, adjusted by interest at 1% per year plus TR.

The meat exporter also proposed selling non-core assets through one or more UPIs.

Creditors could use claims to bid for UPIs, subject to conversion factors of 1.00 for extraconcursal claims (credits outside of the proceeding due to their nature), 0.90 for secured claims, and 0.50 for unsecured and small-business claims, according to the plan.

Proceeds from UPI sales would be applied first to creditors holding fiduciary liens on assets included in the relevant UPI, with any surplus retained by the debtors. The debtors also reserved the right to transfer assets to special purpose entities to facilitate transactions.

The plan further authorized the debtors to obtain DIP financing to fund working capital and pay extraconcursal obligations. The proposal did not detail the amount to be raised in the DIP facility.

Any DIP financing would receive priority status under Brazilian restructuring law and could be incurred after confirmation without additional creditor or court approval.

BMG Foods filed for bankruptcy protection on 2 August, seeking protection of BRL 3.5bn (USD 688m) in claims. On 6 August, the court granted the bankruptcy protection request.

BMG is one of the guarantors of the USD 300m 7.7% senior secured notes due 2028 issued by Paraguay-based Frigorífico Concepción. The notes have BNY Mellon as trustee and are listed in BMG’s credit list as unsecured creditors.

Another significant portion of the group’s indebtedness is linked to approximately USD 108.6m under senior secured credit facilities comprising tranches known as A, B and C.