Alpha Latam Management, LLC, parent company of Alphacredit affiliates in México and Colombia announced this morning that it has filed for Chapter 11 bankruptcy in the US Bankruptcy Court for The District of Delaware. Spokespersons for the company said in a written statement that they aim to liquidate the firm’s Colombian assets but exclude the company’s Mexican operating entities from the bankruptcy.
Alphacredit is a consumer finance company that offers payroll-based lending (libranzas) and direct-to-consumer financing products in Colombia & Mexico.
Last April, the company announced that it would restate its financials for 2018 and 2019 to correct an error in Alpha Holding’s derivative positions. Soon the company had to announce that it found additional accounting errors that would lead to material restatement of other assets, including accounts receivable.
These errors led to multiple defaults on Alpha Holding debt. Lenders to Alpha Holdings were unwilling to offer the forbearances or waivers that the company sought, cutting off liquidity necessary to continue originating new loans and leading to the bankruptcy filing.
Alpha Holdings says that it has obtained, subject to Bankruptcy Court approval, debtor-in-possession financing for a senior secured facility of $45 million USD. The company says it expects access to the debtor-in-possession financing, together with its incoming cash from collections, will provide them with sufficient liquidity to consummate an orderly sale of its Colombian loan portfolio.
Alpha Holdings says it has requested Bankruptcy Court permission to continue operating the Colombian business without interruption to ensure that collections of all outstanding loans continue in the ordinary course. The lender stated that it intends to continue to act in accordance with Colombian governmental regulations, including with respect to employee benefits and severance payments associated with recent work force reductions.
Court filings and claims information are available at http://cases.primeclerk.com/alphalatam.