Alpha Latam Management Files for Chapter 11, Secures $45MM in DIP Financing

Alpha Latam Management (ALM) and certain of its affiliates that operate its Colombian business filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the District of Delaware. The debtors are a technology-enabled financial services company that provides consumer lending products in Colombia._x000D_
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The debtors’ affiliates operating in Mexico, including Alpha Holding, are not included in the Chapter 11 filing._x000D_
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Alpha Holding identified accounting errors that it anticipates will result in a restatement of other assets and other accounts receivable in its financial statements for previous years, including the prior period financial statements, or a current write-down of other assets and other accounts receivable. The accounting errors ultimately resulted in several defaults and events of default under the company’s funded debt obligations. Though the company endeavored to negotiate forbearance and waiver agreements with several of its lenders, such efforts were unsuccessful. Given these events, the company no longer had access to the new financing necessary to continue originating new loans and, accordingly, has ceased its on-balance sheet origination activities. The bankruptcy filing became necessary despite the company’s efforts to streamline the business by implementing cost-cutting measures._x000D_
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To fund working capital needs, the debtors obtained, subject to bankruptcy court approval, debtor-in-possession financing for a senior secured facility of $45 million. The debtors expect the debtor-in-possession financing, together with incoming cash from collections, will provide sufficient liquidity to consummate a value-maximizing sale transaction of their Colombian loan portfolio._x000D_
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The debtors 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 debtors intend 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.