On April 9, 2021, Automotores Gildemeister SpA (“AG”) commenced solicitation of its “prepackaged” plan to file bankruptcy in the United States. If successful, AG will avoid paying amounts due in mere weeks on its 8.25% Notes for up to 14 years. Similarly, holders of the 6.75% Notes due in 2023 and the 7.5% Notes due 2021 (together with the 8.25% Notes, the “Senior Notes”) will receive new subordinated notes that extend maturity for 14 years, allow AG to escape paying most of the interest obligations in cash to holders of the Notes, and reduce the amount due on the Senior Notes by almost 80%.
“If AG succeeds in its efforts, it will be an extraordinarily bad outcome for holders of Senior Notes,” said William Sugden, Alston & Bird partner in the firm’s Financial Restructuring & Reorganization Group, who is representing holders of the Senior Notes. “My clients – holders of a majority of 8.25% senior notes—have attempted for months to play a meaningful role in AG’s restructuring. AG has refused to participate in discussions in any meaningful way and are now trying to railroad through an improper bankruptcy plan in mere weeks. My clients believe that AG is attempting to do this in a way that minimizes the likelihood that holders of Senior Notes – most of whom may be retail Chilean investors – will even understand what is going on before it is too late.
“To avoid this outcome, the time for holders of Senior Notes to organize is now. Holders of Senior Notes will have the opportunity to participate as a member of an Unsecured Creditors’ Committee at no cost to themselves. But they need to act swiftly or will forever lose the opportunity to participate. We believe that there are viable grounds to contest AG’s course of action and protect the rights of holders of Senior Notes, while still preserving the jobs of AG employees. AG’s plan has essentially been dictated to it by holders of their Secured Notes due 2025. We believe that there are viable grounds to oppose this plan that does not compromise AG’s ability to operate as a going concern, but it requires holders of Senior Notes to act now.”
Any holder of Senior Notes seeking additional information regarding AG’s forthcoming bankruptcy, the solicitation materials, or the steps to be taken to protect the interests of holders of Senior Notes should contact: William Sugden, +1 (404) 881-4778, will.sugden@alston.com.
“If AG succeeds in its efforts, it will be an extraordinarily bad outcome for holders of Senior Notes,” said William Sugden, Alston & Bird partner in the firm’s Financial Restructuring & Reorganization Group, who is representing holders of the Senior Notes. “My clients – holders of a majority of 8.25% senior notes—have attempted for months to play a meaningful role in AG’s restructuring. AG has refused to participate in discussions in any meaningful way and are now trying to railroad through an improper bankruptcy plan in mere weeks. My clients believe that AG is attempting to do this in a way that minimizes the likelihood that holders of Senior Notes – most of whom may be retail Chilean investors – will even understand what is going on before it is too late.
“To avoid this outcome, the time for holders of Senior Notes to organize is now. Holders of Senior Notes will have the opportunity to participate as a member of an Unsecured Creditors’ Committee at no cost to themselves. But they need to act swiftly or will forever lose the opportunity to participate. We believe that there are viable grounds to contest AG’s course of action and protect the rights of holders of Senior Notes, while still preserving the jobs of AG employees. AG’s plan has essentially been dictated to it by holders of their Secured Notes due 2025. We believe that there are viable grounds to oppose this plan that does not compromise AG’s ability to operate as a going concern, but it requires holders of Senior Notes to act now.”
Any holder of Senior Notes seeking additional information regarding AG’s forthcoming bankruptcy, the solicitation materials, or the steps to be taken to protect the interests of holders of Senior Notes should contact: William Sugden, +1 (404) 881-4778, will.sugden@alston.com.