Chilean bank shareholder secures bankruptcy protection in Delaware

A branch of Itau Bank is seen in Vina del Mar, Chile, July 30, 2019. REUTERS / Rodrigo Garrido

  • Noteholders decided to freeze the assets of the holding company in June
  • The available liquidity will finance the bankruptcy process

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Corp Group Banking SA (CGB), represented by Simpson Thacher & Bartlett, filed for chapter 11 protection June 25 to restructure nearly $ 2 billion in debt. That figure includes $ 500 million in New York law bonds that the company defaulted on. CGB, which is controlled by Chilean billionaire Alvaro Saieh, owns 26.2% of the bank’s common stock.

In a virtual hearing Thursday, U.S. bankruptcy judge Kate Stickles in Wilmington, Delaware, said she would approve what effectively serves as a comfort order to ensure creditors outside the United States do not attempt. not to sue CGB or to try to collect debts owed.

While U.S. bankruptcy law automatically protects Chapter 11 debtors from such lawsuits, this shield does not exist in many other countries, prompting CGB to seek an order upholding this protection. However, non-bankrupt CGB subsidiaries do not enjoy the same protection.

The Chapter 11 filing was precipitated by several years of falling Itau Corpbanca’s stock prices. Recently, noteholders represented by Cleary Gottlieb Steen & Hamilton filed documents requesting the appointment of a director and aimed at freezing the assets of the company, which led to the company filing for bankruptcy. Cleary’s Luke Barefoot said in Thursday’s hearing that some noteholders are pursuing fraudulent transfer claims against the company.

CGB said in court papers that the allegations have no basis.

The company has no activity and its only asset is its stake in Itau Corpbanca. CGB has about $ 13 million in cash that it will use to fund the bankruptcy process.

CGB will return to Delaware court on August 12 for a follow-up hearing.

The case is In re Corp Group Banking SA, US Bankruptcy Court, District of Delaware, No. 21-10969.

For CGB: Michael Torkin, Bryce Friedman, David Zylberberg and Ashley Gherlone from Simpson Thacher & Barlett and Pauline Morgan, Sean Greecher, Andrew Magaziner and Elizabeth Justison from Young Conaway Stargatt & Taylor

For ticket holders: Luke Barefoot of Cleary Gottlieb Steen & Hamilton

Read more:

Itau added as defendant in CorpBanca Chile merger litigation

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