Tue 08/02/2022 11:59 AM
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A group of Crédito Real shareholders that hold about 15% of the company’s share capital told Reorg that it is organizing to obtain certain rights, in accordance with the nonbank financial company’s articles of association and Mexican company law. The group is seeking to obtain information that has not been disclosed by Crédito Real amid media reports that loans were granted to companies linked to shareholder and former Chairman Ángel Berrondo and subsequently forgiven.

The group began organizing after the Mexican Stock Exchange halted trading of Crédito Real shares on June 1. The group consists of 282 Crédito Real shareholders holding approximately 56 million shares, or 15.18% of total shares, Samuel Hernández Sandoval, an individual investor based in Guadalajara who is organizing the shareholders, told Reorg.

Crédito Real is scheduled to hold a shareholders’ assembly on Aug. 15. According to a notice filed with exchange BMV that accompanied an update on the company’s restructuring, directors will be appointed to put into place resolutions adopted by shareholders during the meeting.

Crédito Real’s articles of association provide for the following:

  • Shareholders with at least 10% of the company’s share capital are entitled to appoint a member to the board of directors;

  • Shareholders with at least 10% of the company’s capital stock have the right to compel the company’s board of directors to call a shareholders’ meeting to discuss any topic that is disclosed in their request, under Article 184 of the Ley General de Sociedades Mercantiles;

  • Shareholders with at least 10% of the company’s share capital can request that voting on an issue that they do not have sufficient knowledge of be pushed back by three days; and

  • Shareholder with at least 20% of the company’s share capital have the right to legally oppose shareholder meeting resolutions, under the conditions of Article 201 of Mexico’s Ley General de Sociedades Mercantiles.

Because they hold more than 10% of total shares, the group will have the right to participate in the shareholders’ assembly on Aug. 15 and appoint a board member, or consejero, and auditor, or comisario, to be in contact with the liquidator, Hernández Sandoval said.

The group said that by doing so, it hopes to gain access to more information about capital shortfalls at Crédito Real that were initially covered up by allegedly faulty auditing, according to Hernández Sandoval. In particular, Hernández Sandoval said, the group hopes to investigate media reports that Crédito Real gave loans to companies owned by associates of Berrondo, which were subsequently treated as written-off loans and never collected. Crédito Real did not respond to a request for comment.

Hernández Sandoval said that he organized the group largely by putting out calls on Twitter and Facebook.

The group is represented by Mexico City-based Teodoro von Harrsch. Von Harrsch is a partner at von Harrsch Amerena & Asociados.

If the group discovers that the company engaged in fraud or illegal activity, it hopes to be able to delay or stop a liquidation proceeding ordered by a Mexico City judge on July 14. The liquidation order relies on an analysis showing that Crédito Real lost at least two-thirds of its capital, which, according to the General Law of Business Organizations, or Ley General de Sociedades Mercantiles, represents a cause for dissolution. However, if the analysis showing the company lost two-thirds of its capital turns out to be incorrect after further auditing, the order would be invalidated, von Harrsch told Reorg.

The group also has the right to file a lawsuit against Crédito Real because it represents at least 15% of shares, von Harrsch said, in accordance with the Ley General de Sociedades Mercantiles.

A Mexico City judge ordered Crédito Real to be liquidated on July 14 after months of speculation over whether the company would file for chapter 11. The dissolution order was requested by Berrondo, as reported, possibly as part of a strategy to avoid the greater disclosure requirements that would come with a U.S. proceedings. The judicial liquidation resulted from legal action filed by Berrondo, it was later revealed, pursuant to the General Law of Business Organizations, as reported.

The liquidation order followed the filing of an involuntary chapter 11 case against Crédito Real in the U.S. Bankruptcy Court for the Southern District of New York. The filing was supported by an ad hoc group of unsecured creditors advised by Akin Gump and Houlihan Lokey, as reported.

The process is separate from a concurso mercantil, or insolvency proceedings under Mexican law, a legal source clarified. However, Crédito Real subsequently filed a chapter 15 recognition petition in Delaware. The source added that it is unclear whether the non-insolvency liquidation should be recognized under chapter 15.

After the July 14 ruling in Mexico, Crédito Real asked a New York bankruptcy judge to dismiss the chapter 11 proceeding, arguing that the company is already being liquidated by a Mexican court. Crédito Real also filed a motion to transfer the chapter 11 case to the district of Delaware. On Monday, Aug. 1, Southern District of New York Bankruptcy Court Judge David S. Jones granted a motion filed by Crédito Real to transfer the proceeding to the District of Delaware, while declining to rule on the motion to dismiss.

--Roberto Barros, Simon Schatzberg
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