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/raid1/www/Hosts/bankrupt/TCRLA_Public/220623.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Thursday, June 23, 2022, Vol. 23, No. 119 Headlines B R A Z I L BRAZIL: IDB to Support Ministry of Economy SAMARCO MINERACAO: Creditors to Discuss Rival Proposals June 21 UNIVERSITY OF RIO DE JANEIRO: Could Close Due to Lack of Budget C H I L E CORP GROUP: Gets Court Approval for Liquidation Plan M E X I C O CREDITO REAL: Battered By Hidden Losses, Missing Money CREDITO REAL: Fires Advisers, Scraps U.S. Bankruptcy Plans P U E R T O R I C O PUERTO RICO: HTA's Debt Reorganization Heading for Creditor Vote X X X X X X X X [*] LATAM: Curacao Looks to Region for Free Zone Lessons - - - - - =========== B R A Z I L =========== BRAZIL: IDB to Support Ministry of Economy ------------------------------------------ The Inter-American Development Bank (IDB) announced it will expand technical support to Brazil's Ministry of Economy to help the country accede to the Organization for Economic Co-operation and Development (OECD). In addition, the IDB presented an analysis of Ministry of Economy initiatives that already align with OECD member country management practices and policies. IDB President Mauricio Claver-Carone and Brazilian Deputy Minister of Economy Marcelo Guaranys signed a protocol to formalize the work that the IDB will undertake jointly with the Ministry to support for Brazil's entry into the OECD. "With this agreement, we are reinforcing our commitment to support Brazil's efforts to join the OECD," said President Claver-Carone. "This is an incredible opportunity to promote the type of inclusive growth and sustainable development that will benefit all Brazilians. I am personally committed to this process and thrilled to support Brazil in this and in so many other areas." "[On June 14], we signed a cooperation agreement with the IDB with which we will receive support in the OECD accession process, that formally started. We will receive a roadmap and will be evaluated by 26 committees on various aspects of both public policy and legislation", said Marcelo Guaranys, Deputy Minister of Economy of Brazil. "The IDB is committed to provide us with the technical support and information necessary to help us move efficiently through the process of becoming a member of the OECD". As part of its support, the IDB will research and present actions plans for how to adopt OECD best practices in areas of public policy under the mandate of the Ministry of Economy. It will also organize meetings with authorities from OECD member countries, international experts, and institutions from the Brazilian private sector and civil society to foster broad participation in the technical discussions about joining the OECD. The IDB also plans to strengthen institutional capacities of the Secretariat of International Economic Affairs to coordinate and monitor the process of joining the OECD within the Ministry of Economy. Study finds alignment with best practices In addition to its planned activities, the IDB has already worked with ministry teams in order to apply good practices from OECD countries. As part of a restructuring at the new Ministry of Economy, the IDB performed a benchmarking study that found that several initiatives introduced to improve management and public policies are aligned with OECD country practices. Experts and former ministers from OCDE member countries and other Latin American countries participated in the technical analysis, which has made it possible to compare international models and identify initiatives that can serve as inspiration for Brazil. Regarding Brazilian infrastructure, for example, the study highlights the creation of an interministerial planning committee and the inclusion of a long-term plan that resembles recent reforms in Australia, Canada, and the United Kingdom. In the chapter on budget management, the study commends the centralization of management for IT, human resources, logistics and other areas as part of the TransformaGov program. This centralization resulted in more efficient public spending, in a transformation similar to the model adopted by the United Kingdom. As reported in the Troubled Company Reporter-Latin America on June 17, 2022, S&P Global Ratings affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings on Brazil. SAMARCO MINERACAO: Creditors to Discuss Rival Proposals June 21 --------------------------------------------------------------- Reuters reports that the judge overseeing Brazilian miner Samarco Mineracao's bankruptcy has scheduled a mediation hearing between the company, shareholders Vale and BHP and creditors to hammer out a restructuring agreement. Creditors rejected the company's last proposal on April 18, 2022 and filed an alternative plan a month later, in which a debt-for-equity swap would turn them into Samarco's controlling shareholders. Unions representing employees presented another plan on May 19, 2022 with Samarco and its shareholders' support. Judge Adilon Claver de Resende said the mediation hearing aims to find middle ground between the proposals. It has not yet been decided how the restructuring would proceed with the two competing plans. About Samarco Mineracao SA Samarco Mineracao SA is a Brazilian mining joint venture between BHP Group and Vale SA. It serves as an iron ore processing company. The company provides blast furnace, direct reduction, sinter feed, as well as low and normal silica content pellets. On April 9, 2021, the Debtor filed a voluntary petition for judicial reorganization in the 2nd Business State Court for the Belo Horizonte District of Minas Gerais in Brazil pursuant to Brazilian Federal Law No. 11,101 of Feb. 9, 2005. Samarco Mineracao filed for Chapter 15 bankruptcy recognition (Bankr. S.D.N.Y. Case No. 21-10754) on April 19, 2021, in New York, to seek U.S. recognition of its Brazilian proceedings. The Debtor's U.S. counsel is Thomas S. Kessler of Cleary Gottlieb Steen & Hamilton LLP. UNIVERSITY OF RIO DE JANEIRO: Could Close Due to Lack of Budget --------------------------------------------------------------- Rio Times Online reports that Brazil's largest university, the Federal University of Rio de Janeiro (UFRJ), may be forced to temporarily close its doors due to a lack of budget, according to rector Denise Carvalho. At a press conference, Carvalho explained that with the recent cuts announced by the government, the university would not be able to pay for water, electricity, cleaning, and security services "as of October," the report notes. Brazil's Ministry of Education recently announced a 14.5% cut in the budget of Brazilian federal universities, the report adds. ========= C H I L E ========= CORP GROUP: Gets Court Approval for Liquidation Plan ---------------------------------------------------- Daniel Gill of Bloomberg Law reports that Corp Group Banking SA, a Chilean financial holding company controlled by billionaire Alvaro Saieh, won court approval of its Chapter 11 liquidation plan, calling for its affiliates and Saieh to pay up to $30 million to partially pay back creditors. The bankrupt company, a subsidiary of Chilean conglomerate CorpGroup, will pay unsecured creditors 9% of their $1.3 billion in claims, according to the plan approved at a hearing June 15, 2022, by Judge J. Kate Stickles of the US Bankruptcy Court for the District of Delaware. About Corp Group Banking S.A. Corp Group Banking SA, a Chilean financial holding company controlled by billionaire Alvaro Saieh, and Inversiones CG Financial Chile Dos SpA filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 21-10969) on June 25, 2021. At the time of the filing, Corp Group Banking disclosed $500 million to $1 billion in assets and $1 billion to $10 billion in liabilities. Judge J. Kate Stickles oversees the cases. The Debtors tapped Simpson Thacher & Bartlett, LLP and Young Conaway Stargatt & Taylor, LLP as legal counsel. Prime Clerk, LLC is the Debtors' claims and noticing agent and administrative advisor. The U.S. Trustee for Region 3 appointed an official committee of unsecured creditors on July 20, 2021. The committee tapped Morgan, Lewis & Bockius, LLP as lead bankruptcy counsel, Robinson & Cole LLP as Delaware counsel, and NLD Abogados as special Chilean counsel. FTI Consulting, Inc., serves as the committee's financial advisor. =========== M E X I C O =========== CREDITO REAL: Battered By Hidden Losses, Missing Money ------------------------------------------------------ Alexander Saeedy and Anthony Harrup of the Wall Street Journal report that Credito Real built a booming business lending at high interest rates to Mexican teachers and other government workers. The loans were paid back through payroll deduction, reducing the risk of nonpayment. Now it is planning to file for bankruptcy in Mexico after it has faced growing skepticism over how it has been reporting its earnings and measuring the size of its loan portfolio. Investors pulled the plug on the lender amid questions over why roughly half of the value of its loan portfolio, or around $1.1 billion, consisted of unpaid interest, which the company still hasn't explained. Credito Real would be the second nonbank lender in Mexico specializing in payroll loans to restructure following scrutiny of their accounting and allegations of concealed losses. There has been no explanation for the missing money at either institution. Credito Real opened in 1993 and now serves more than 1 million mostly low- and middle-income borrowers who lack a credit history and can't get loans from more conservative retail banks. Its main borrowers are mostly unionized government employees such as teachers. Payroll loans, a cousin of payday loans, account for more than a quarter of total consumer lending in the country, according to the Bank of Mexico. Typically loans average about $1,000 to be paid back over three years, with borrowers using them to open side businesses, cover health emergencies, buy school supplies or pay off more expensive loans, industry executives say. About Credito Real SAB Credito Real SAB de CV SOFOM ENR is a Mexico-based company that provides consumer financing. Credito Real provides loans, either by providing direct financing to consumers or by establishing financing programs with consumer financing dealers that sell to Credito Real the collection rights from consumer financing products. It also provides financing directly to individuals that are employed by corporations with payroll deduction agreements with consumer financing dealers authorized by Credito Real. Credito Real operates through a number of subsidiaries, including AFS Acceptance LLC. Credito Real is Mexico's biggest payroll lender and second largest non-bank lender after Real Unifin. Creditor Real has $1.9 billion in global notes out of a total debt of MXN53.3 billion ($2.72 billion). Credito Real fell into default earlier this year after it failed to repay holders of a maturing Swiss franc bond. It had been looking to line up financing from existing creditors. The Mexican payroll lender had been weighing a Chapter 11 filing after defaulting on the repayment of its Swiss franc bond. But Bloomberg reported mid June 2022 that Credito Real SAB fired legal and financial advisers who had been preparing to guide it through a Chapter 11 bankruptcy filing in the US. Credito Real SAB reportedly has scrapped its U.S. bankruptcy plans and is instead planning to pursue insolvency proceedings in Mexico known as concurso mercantil. CREDITO REAL: Fires Advisers, Scraps U.S. Bankruptcy Plans ---------------------------------------------------------- Jeremy Hill and Dale Quinn of Bloomberg News report that Credito Real SAB, Mexico's largest payroll lender, fired legal and financial advisers who had been preparing to guide it through a Chapter 11 bankruptcy filing in the US. The Mexican payroll lender had been weighing a Chapter 11 filing after defaulting on a repayment of a Swiss franc bond. But according to Bloomberg's sources, Credito Real SAB has scrapped its U.S. bankruptcy plans and is instead planning to pursue insolvency proceedings in Mexico known as concurso mercantil. Credito Real fell into default earlier this year after it failed to repay holders of a maturing Swiss franc bond. It had been looking to line up financing from existing creditors. Creditor Real has $1.9 billion in global notes out of a total debt of MXN53.3b ($2.72 billion). Creto is Mexico's biggest payroll lender and second largest non-bank lender after Real Unifin. About Credito Real SAB Credito Real SAB de CV SOFOM ENR is a Mexico-based company that provides consumer financing. Credito Real provides loans, either by providing direct financing to consumers or by establishing financing programs with consumer financing dealers that sell to Credito Real the collection rights from consumer financing products. It also provides financing directly to individuals that are employed by corporations with payroll deduction agreements with consumer financing dealers authorized by Credito Real. Credito Real operates through a number of subsidiaries, including AFS Acceptance LLC. ===================== P U E R T O R I C O ===================== PUERTO RICO: HTA's Debt Reorganization Heading for Creditor Vote ---------------------------------------------------------------- Rick Archer of Law360 reports that a New York federal judge Friday, June 17, 2022, sent the plan to restructure the Puerto Rico Highways and Transportation Authority's $6.7 billion debt out for a creditor vote, overriding a group of highway engineers who said their wage litigation claims were wrongly classified. At the hearing, U.S. District Judge Laura Swain found the disclosure statement submitted by the Financial Oversight and Management Board of Puerto Rico was adequate, saying the engineers' argument that their work was too vital to call their pay claims unsecured can be resolved at the plan confirmation hearing. The proposed scheduling order provides for a July 27 deadline for objections to confirmation, a July 27 voting deadline, and an Aug. 17-18 Plan confirmation hearing. About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt-load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ('PROMESA'). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21, 2017. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that may be referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets, as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are on-board as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and to chair a committee to review professionals' fees. * * * The two Title III plans of adjustment have been confirmed to date, for the Commonwealth and COFINA debtors. =============== X X X X X X X X =============== [*] LATAM: Curacao Looks to Region for Free Zone Lessons -------------------------------------------------------- Anthony Lewis at Jamaica Observer reports that Prime Minister of Curacao Gilmar Pisas is looking to Latin America and the Caribbean for lessons that will help his Government's push to transform his country's almost 50-year-old free zone sector into a vibrant generator of economic activity and employment. "We have been interested in learning how several countries. . . . have become very competitive through very intelligent and adequate management of their free trade zones," he said, according to Jamaica Observer. He was addressing the World Free Zone Organization 8th Annual International Conference & Exhibition, the report relays. He cited Singapore and Hong Kong as two locations that have done particularly well with their free zones, then turned his attention closer to home, the report notes. "There is, for instance, the case with the Dominican Republic, where its free zones will end this year providing 200,000 direct jobs and. . . 60 per cent of total exports for a value exceeding US$7 billion," said Pisas, the report discloses. Other islands in the Americas that also have a free trade zone regime are Puerto Rico and the nearby country of Haiti which shares a bi-national trade zone with the Dominican Republic. Jamaica also has a vibrant free zone sector, the report discloses. Established in 1975, Curacao's free zone was one of the first of 79 in the world. "Today, we are very proud to be still part of the more than 7,000 free zones around the world. . . . The ambition and commitment of the Government of Curacao is to develop our free zones into a vibrant generator of economic activities and employment so that in the future, we can continue having our free zones as a key economic pillar and catalyst for resilient economic growth," stated Pisas, the report relays. "We have to become judicious students in understanding the experiences of free trade zones around the world. We recently went to Dubai where. . . . more than 30 free trade zones generate about 40 per cent of total exports and have added significantly to . . . its economic development trajectory," he added. He identified five factors that make Curacao the ideal location for free zones. Its youthful, multilingual population, he said, makes it attractive to investors. He also pointed to Curacao's "clean and renewable energy matrix of about 35 per cent" and its potential as "the headquarters of important data centres and other sophisticated services such as wellness and medical tourism, technology and even the filming of movies," the report relays. Pisas also highlighted two advantages his country has over international competitors, the report notes. "Firstly, the ability to export to the European Union - and especially to the Netherlands - duty-free final products made from Latin American and Caribbean raw materials. And secondly, it also enjoys preferential treatment with the United States within the Caribbean Basin Initiative," he said, the report disclsoes. He also told the gathering that the Government of Curacao recently approved a national export strategy with a focus on strengthening the economy and supporting the export of goods and services to stimulate foreign exchange earnings by applying technology and innovation in existing traditional sectors and by stimulating new center, the report relays. "The new Curacao free trade zones will have modern legislation that will be compatible with the world trade organizations' standards and rules, as well as a new dispensation for economic cooperation and development globally," stated Pisas, the report notes. "Ladies and gentlemen, we are absolutely sure that the new free trade zones of Curacao will change the history and the quality of life of our country by generating new jobs, new opportunities and new experts that will take advantage of the full potential," he assured, the report adds. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2022. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *