January 4, 2022 – The Debtors filed a motion to extend (for a second time) the periods during which they have an exclusive right to file a Chapter 11 Plan, and solicit acceptances thereof, through and including March 24, 2022 and May 25, 2022, respectively [Docket No. 414]. Absent the requested relief, the Plan filing and solicitation periods are scheduled to expire on January 7, 2022 and March 10, 2022, respectively.
On December 27, 2021, the Debtors filed a Plan of Liquidation and a related Disclosure Statement [Docket Nos. 404 and 405, respectively]; with a hearing to consider approval of the Disclosure Statement now scheduled for February 2, 2022. This exclusivity extension motion is to be considered at a January 18th omnibus hearing. The Debtors insist that they "have continued to build consensus for a confirmable chapter 11 plan" and "are optimistic that…the Plan will be presented to the Court for confirmation by mid-March." That said, Debtors add as to the still fluid nature of their consensus building efforts: "the facts surrounding the commencement of the Chapter 11 Cases require further review to support the Debtors’ goal of consensus." Central to those efforts is reaching an understanding with their creditors' committee which continues to investigate "estate claims and potential challenges to the asserted claims."
Summing up their qualified optimism, the Debtors note: "The Debtors understand that the Committee’s ongoing investigation, and the related adjudication of the Committee Standing Motion and Committee Claim Objections, will require time and effort from all interested parties."
The extension motion explains, “The Debtors now seek a second extension of the Exclusive Periods until one week after the proposed confirmation hearing date to continue working with their major stakeholders to confirm and consummate a consensual chapter 11 plan.
Since the First Exclusivity Extension Motion was filed, the Debtors have continued to build consensus for a confirmable chapter 11 plan. To that end, the Debtors have engaged in good faith discussions with Holders of Non-Recourse Secured Claims, Itaú, the Committee, and the proposed Settling Parties regarding a chapter 11 plan and related issues. In crafting a confirmable plan of liquidation, the Debtors also have worked with the Committee to address discovery requests and due diligence inquiries in an effort to inform the Committee’s recovery analysis and provide further context for the plan proposal…In light of their progress over the past few months, the Debtors seek a modest extension of the Exclusive Filing Period, through a week after the proposed Confirmation Hearing date (and a corresponding extension to the Exclusive Solicitation Period), to preserve their rights if the current Plan is not confirmed on the timeline proposed.”
The motion continues, “The Debtors have over $1 billion in liabilities, and entered into a number of complex financing and cross-border M&A transactions between 2012 and 2017. As a result, even though the Debtors have de minimis operations, the facts surrounding the commencement of the Chapter 11 Cases require further review to support the Debtors’ goal of consensus. In particular, in order to move forward with plan negotiations, the Debtors recognized the need to provide the Committee with an opportunity to investigate estate claims and potential challenges to the asserted claims. To that end, prior to and since the First Exclusivity Extension Motion was filed, the Debtors have reviewed and produced a substantial number of documents (many in Spanish) to the Committee and cooperated with the Committee’s ongoing discovery requests…The Debtors understand that the Committee’s ongoing investigation, and the related adjudication of the Committee Standing Motion and Committee Claim Objections, will require time and effort from all interested parties, all of which can be resolved in the context of the near-term Confirmation Hearing. In short, the size and complexity of these cases strongly supports the extension of the Debtors’ exclusive periods.
As discussed above, with the support of their largest creditor, the Debtors filed a Plan, Disclosure Statement, and Solicitation Procedures Motion on December 27, 2021. The Debtors are optimistic that the Solicitation Procedures Motion will be approved in early February, if not sooner, and that the Plan will be presented to the Court for confirmation by mid-March. The Debtors have taken additional steps to facilitate confirmation of the Plan, including filing the Colombia Transactions Motion which, if approved, will authorize the Debtors to consummate the Colombia Transactions, including prior to the Confirmation Hearing, and thereby satisfy the Itaú Colombia Secured Claims in full. The Debtors also filed the CGB Unencumbered Shares Sale Motion, seeking authority to sell CGB Unencumbered Shares so they are able to continue to pay chapter 11 case costs through confirmation of the Plan.…In short, the Debtors have made substantial progress towards resolving these Chapter 11 Cases, and recently filed a viable Chapter 11 Plan that contemplates a viable and near-term conclusion for these proceedings….In light of the good faith progress that the Debtors have made thus far and the ongoing Plan negotiations, the Debtors believe that the relevant factors strongly support a short extension of the Exclusive Periods by approximately 76 days.”
Events Leading to the Chapter 11 Filing
In their declaration the Debtors detailed the events leading to Inversiones CG Financial Chile Dos’s Chapter 11 filing. The Declaration provides: “Corp Group Banking S.A. ('CGB') and Inversiones CG Financial Chile Dos S.P.A. ('CGFC 2,' and together with CGB, the 'Debtors') are subsidiaries of Corp Group ('Corp Group'), domiciled in Chile and headquartered in Santiago, Chile. The Debtors own approximately 26.2% of the common equity of Itaú Corpbanca ('Itaú Corpbanca'), a publicly traded Chilean bank controlled by Itaú Unibanco S.A. and its affiliates (collectively, 'Itaú'). They also own, directly and indirectly, approximately 10.3% of the common equity of Itaú Corpbanca Colombia S.A., a Colombian bank subsidiary of Itaú Corpbanca ('Itaú Corpbanca Colombia' and together with Itaú Corpbanca, the 'Bank'). The Debtors’ revenue is almost exclusively dependent on dividends paid by the Bank….
Over the past several years, the financial performance of the Bank has deteriorated dramatically. In turn, the share price of Itaú Corpbanca has decreased, and the Debtors have received far smaller dividends than expected when CGB issued the Notes and incurred obligations to Itaú. Based on the current condition of the Bank, the Debtors are unable to repay their obligations in full.
Beginning in the third quarter of 2020, the Debtors and their subsidiaries (collectively, 'Corp Group Financial') urged their two primary creditor constituencies — Itaú and an ad hoc group of Noteholders (the 'Ad Hoc Group') — to engage in discussions aimed at achieving a consensual restructuring or orderly liquidation of Corp Group Financial. While Itaú has participated in difficult negotiations with Corp Group Financial for several months, the Ad Hoc Group has been unwilling to negotiate on the basis of Corp Group Financial’s proposals. Over the past several weeks, Corp Group Financial has had productive discussions with Itaú on the terms of a transaction to be implemented through Chapter 11 proceedings. In recent days, rumors of a potential transaction have begun to leak into the Chilean press.
In January 2021, certain Noteholders in the Ad Hoc Group commenced proceedings in Santiago, Chile (the 'Chilean Action') by filing a pre-judicial discovery motion requesting certain information from CGB and certain of its affiliates. On June 15, 2021, the Ad Hoc Group filed a complaint in the Chilean Action seeking to avoid numerous transactions made by CGB over the past seven years, and on June 23, 2021, the Ad Hoc Group filed a request for an emergency injunction appointing an administrator over CGB and freezing its assets (including assets that are pledged to Itaú and other secured creditors).
The Debtors believe — and will ultimately demonstrate — that the claims asserted by the Ad Hoc Group are without merit. Unfortunately, the Ad Hoc Group’s attempts to collect on their unsecured claims3 have forced the Debtors to expedite the filing of these Chapter 11 cases (the 'Chapter 11 Cases') to protect the value of the Debtors’ estates and to ensure that all of their creditors are treated fairly, in accordance with their respective priority under applicable law."
The Declaration further explains, "The Debtors intend to continue to pursue a consensual transaction during the Chapter 11 Cases. While the Ad Hoc Group’s decision to pursue litigation over negotiation is unfortunate, the Debtors are hopeful that the breathing room created by the automatic stay and exclusivity will encourage all of their stakeholders to engage in negotiating a fair, orderly and fully-consensual wind down of Corp Group Financial."
As of the Petition Date, the Debtors’ capital structure consists of the following debt obligations of CGB. The Debtors have no trade debt.
Corpgroup Interhold SpA owns 228,623,711 shares (99.9999996%) of CGB.
About the Debtors
According to the Debtors: “Corp Group Banking S.A. ('CGB') and Inversiones CG Financial Chile Dos S.P.A. ('CGFC 2' and, together with CGB, the 'Debtors') are subsidiaries of Corp Group ('Corp Group'), domiciled in Chile and headquartered in Santiago, Chile. The Debtors own approximately 26.2% of the common equity of Itaú Corpbanca ('Itaú Corpbanca'), a publicly traded Chilean bank controlled by Itaú Unibanco S.A. and its affiliates (collectively, 'Itaú'). They also own, directly and indirectly, approximately 10.3% of the common equity of Itaú Corpbanca Colombia S.A., a Colombian bank subsidiary of Itaú Corpbanca ('Itaú Corpbanca Colombia' and together with Itaú Corpbanca, the 'Bank')."
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The post Corp Group Banking S.A. – Optimistic that Issues Can be Resolved with Creditors’ Committee and Plan Presented for Confirmation by Mid-March, Holders of ‘Itaú Corpbanca Equity Seek Second Extension of Plan Exclusivity Periods appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.