Crédito Real Files for Bankruptcy Protection in Mexico

Crédito Real, a Multiple Purpose Financial Company (SOFOME), has filed for bankruptcy protection, following nearly two years of negotiations with debt holders. The company will continue its operations alongside a restructuring process aimed at meeting its financial obligations.

In May, Crédito Real agreed to appear before a Commercial Bankruptcy judge. The formal request for bankruptcy protection was submitted in mid-October 2023 and the ruling was announced on Nov. 13.

The company is now in a conciliation period of 185 calendar days, during which Crédito Real will engage in negotiations and seek agreements with its creditors, all of whom may submit applications for credit recognition. Failure to reach a bankruptcy agreement within the stipulated period would lead to a liquidation stage. Crédito Real would be required to sell its assets to fulfill payments to recognized creditors and the company would cease its operations.

Crédito Real faced significant challenges, marked by its default on a US$176 million bond in February 2022, causing a decline in the value of its bonds by 99%, reported Reuters. Subsequently, the company ceased payments on the rest of its debts, triggering legal proceedings both in Mexico and the United States.

According to El Economista, Crédito Real has already settled debts with some of its bank creditors, including BBVA, Banorte, Santander, Scotiabank, as well as Nacional Financiera (Nafin) and the Inter-American Development Bank (IDB).

Previously, Crédito Real adopted measures to alleviate its financial situation, such as the sale of subsidiaries and portfolios. The company sold its automotive leasing portfolio, amounting to MX$167.26 million.

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