The Colombo Group, owner of a chain of men’s clothing stores in Brazil, had its extrajudicial restructuring plan ratified on March 3.
With a debt of R$ 1.6 billion, the plan has established four payment options for all classes of creditors: a discount of 30% and payment of the debt upon which an interest rate of 1.5% per year (TR) will accrue over a period of 12 years; an exchange of the debt for shares in the group; and exchange of the debt for convertible debentures with an initial deadline of five years, remunerated in line with the Colombo Group’s profits; and an exchange of the debt for non-convertible debentures with an initial deadline of five years, remunerated in line with the Colombo Group’s profits. This fourth option is designed to meet the needs of banks that cannot include convertible debts in their balances.
According to the decision, the plan has been ratified with the agreement of 68.66% of creditors, with this percentage not including the vote of the Brasil Plural Fund, since it is considered to be an interested party.
Amongst the creditors are the banks HSBC, now Bradesco, with credit of R$ 190.3 million, Santander (R$ 164.5 million), and Itaú Unibanco (R$ 150 million). The Special Situations Fund, which forms part of Brasil Plural, has credit of R$ 158.3 million. Of the shopping centers that hold credit with the Colombo Group, the biggest creditors are BR Malls, with R$ 7.5 million, and Iguatemi, with R$ 760 million.
The ratified plan also establishes the downsizing of the group’s administrative structure, improvement of its corporate governance, adaptation of the stores and occupation costs to the needs of the market, and adaptation of its stock and the number of items in storage.
Pedro Bianchi, of Felsberg Advogados, says that this is the biggest extrajudicial restructuring case in the country. “The judge understood the willingness of the majority of the creditors and the positive impact the extrajudicial restructuring can have for companies that are restructuring their debts,” Bianchi told Broadcast, a real-time news service forming part of the Estado media group.
Felsberg is acting as legal advisor in the restructuring process, whilst Brasil Plural is financial advisor. Judge Paulo Furtado of the 2nd Restructuring and Bankruptcy Court if São Paulo was responsible for ratifying the plan.