2023-09-16 21:43:00
Crédito Real will file a pre-packaged insolvency agreement in a Mexican federal court as soon as next week, people familiar with the matter said, in a bid to resolve the collapse of what had been the country’s largest payroll lender.
Creditors provided the company this week with documentation showing that holders of more than 50 percent of Crédito Real’s $1.9 billion bonds had accepted the deal, allowing the filing to move forward, said the people, who requested the anonymity, since the conversations are private.
Representatives of the company and a group of creditors leading the deal did not respond to requests for comment.
The so-called bankruptcy will lead to the liquidation of the lender’s remaining assets, the people said, adding that it could be delayed beyond next week.
The filing is intended to end a bankruptcy process that is already unfolding in US courts.
What is known about the bankruptcy of Crédito Real?
Credito Real’s bankruptcy in February 2022 was part of a wave of defaults worth more than $5 billion by the country’s lightly regulated non-bank lenders that has left the sector out of global capital markets. .
Under the plan to be presented, which was originally proposed in May, the remaining Crédito Real loans will be placed in a trust that will be overseen by a Mexican judge. Bondholders will receive payments from the trust as those loans are collected, and the company now estimates a recovery of about 22 cents on the dollar over three years, 1 cent less than it had previously forecast.
About half of the total will be paid in the first year, according to a document posted this week on the company’s website. The notes due in 2028 reflect that disbursement, changing hands this week at 11 cents, according to Trace data.
Before the bankruptcy, Crédito Real had a loan portfolio of about 53.4 billion pesos. About $420 million in assets remain, according to the latest estimates released this week, dating back to late July.
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