by Arthur Almeida and Jayjeet Sharma
Debtwire’s Restructuring Insights reports provide a high-level overview of new distressed market activity. This edition examines newly commenced and closed restructurings within Latin America as well as globally of LATAM-based companies during the first half of 2023. According to Debtwire’s Restructuring Database (RDB), restructuring situations in Latin America increased significantly from 2022, which saw only 11 situations throughout the entire year compared to 2023, where we have seen 15 situations just during 1H23.
Newly Commenced Cases
Brazil in particular has seen high-profile, in-court debt restructuring processes commenced in 1H23 including the multibillion judicial recovery filings of Brazilian retailer Americanas SA, electricity distributor Light SA, telecom services Oi SA and Cervejaria Petropolis. In Chile, a reorganizacion concursal was filed by Chile-based, Norway-listed salmon farmer Nova Austral in 1H23. In addition, creditors of Mexican media group TV Azteca filed an involuntary Chapter 11 proceeding against the company with a US bankruptcy court, while Americanas and Oi have sought international recognition of their domestic reorganization proceedings by filing Chapter 15 cases in the United States. Similarly, oil services group Ocyan (formerly Odebrecht Oil & Gas) also commenced a Chapter 15 case in 1H23, in order to seek recognition of its extrajudicial recovery process (a proceeding similar to the US pre-packaged Chapter 11) filed in 2022 to restructure the company’s bond debt.
The remaining processes started in 1H23 did not involve the courts in the initial debt restructuring conversations, according to Debtwire's Restructuring Database. In Brazil, outsourcing specialist Atento SA, retailer Marisa Lojas SA, cement maker Intercement, chemical company Unigel, and construction company Odebrecht Engenharia e Construcao began out-of-court restructurings. Mexican Tangelo (Tangerine Pomelo Group SAPI de CV – formerly Mexarrend) also started out-of-court restructuring negotiations in January 2023, but ultimately filed for concurso (the country’s reorganization proceeding) in August 2023.
Food & beverage, real estate, retail and telecommunications were the busiest sectors for restructuring situations in 1H23, with two cases each. Four situations have more than USD 1bn in liabilities to be restructured, with Oi and Americanas topping the chart for largest cases.
On the advisory side, Moelis & Co led the financial advisors table, while Cleary Gottlieb Steen & Hamilton was at the top of the podium for legal advisors in 1H23, taking Americanas and Light bondholders’ mandates. In terms of creditors, the top position was occupied by Banco do Brasil, which was involved in five of the total cases started during the period; Itau Unibanco, Bradesco and Santander shared the second position, each of which participated in four 1H23 restructurings situations.
Additionally, several restructurings were closed during the period covered by this report. This trend was mainly driven by restructurings in Brazil, which saw long standing in-court cases coming to an end for companies such as oil and gas services provider Lupatech (started in 2015), sugar and ethanol producer Abengoa Bioenergia Brasil (2017), and Queiroz Galvao Energia (QGE) affiliates (i) Ibitu Energetica (formerly Queiroz Galvao Energetica SA) and (ii) Companhia Energetica Santa Clara (2019). More recently filed proceedings were also concluded, including the extrajudicial recovery filings of Ocyan and Andrade Gutierrez Engenharia.
Also closed during 1H23 were bankruptcy proceedings filed by Latin American companies in the US, including the Chapter 15 cases of Novonor (formerly Odebrecht SA) and Oro Negro, and Latam Airlines’ Chapter 11 cases. The Chile-based airline also concluded the ancillary recognition proceedings commenced both in Chile and in Colombia.
Additionally, the Chapter 11 cases commenced by Colombian airline Avianca Holdings and Alpha Latam Management – the US-based company that ultimately owns Mexican non-bank lender AlphaCredit – are also nearing an end. In both cases, the reorganization plans were confirmed by the respective courts and the related proceedings of affiliates were all closed during 1H23, with in-court proceedings remaining open only for the main companies of each of the groups. Certain other companies in the region are also poised to emerge from bankruptcy in 2H2, including Brazilian sugar and ethanol producers Aralco and Atvos.
Explore the entire Restructuring Database here (access required).