Bankruptcy threat lifted from Nova Austral 

A bankruptcy order imposed on debt-laden Chile salmon farmer Nova Austral on May 13 has been reversed on appeal, allowing a judicial reorganisation of the company to go ahead.

Judge Pablo Aceituno, sitting in the Court of First Instance and Guarantee of Porvenir, declared the Norwegian-owned company bankrupt following complaints from two creditors who claimed they had been unfairly treated in the reorganisation. The creditors were feed producer Nutreco, which is owed US $23 million, and smolt supplier Salmonera Dalcahue Limitada.

The Court of Appeals of Punta Arenas suspended the bankruptcy order at the end of May after another feed producer, Ewos, owned by US farming giant Cargill, presented a de facto appeal against the Porvenir court ruling. The court has now permanently reversed the bankruptcy after an appeal by Ewos, Nova Austral and creditors Compañía Naviera Frasal and Servicios Integrales Frasus.

The appeal court said the conditions established by the legislator to accept the challenges to the reorganisation agreement agreed on January 17, 2024, were not met and the May 13 order therefore had to be revoked. But it declined to award costs against Nutreco and Salmonera Dalcahue Limitada because they had reasons to litigate.

$599m debts

Nova Austral has debts of US $559 million, and in January - after months of disagreement – Porvenir’s Court of Letters and Guarantee and a large majority of the company’s creditors approved the judicial reorganisation plan designed to solve the financial problems through debt restructuring, capital injections, and a change of ownership.

The move hands ownership to the salmon farmer’s primary creditors.  When requesting its reorganisation on June 22, 2023, Nova Austral indicated that its largest creditors were Nordic Trustee ($415m), and DNB Bank ($69m).

After the bankruptcy order was imposed on May 13, Nova Austral said the order would put more than 650 directly employed workers of Nova Austral on the street, and endanger the jobs of nearly 3,000 other workers who directly or indirectly depend on the company.

"It also leaves without a response the 132 creditors, out of a total of 136, who voted – in the presence of the court – to approve the reorganisation agreement," argued the company.

Nova Austral also maintained that its performance has been affected by a series of factors that have prevented the normal development of its business, including harsh sanctions that it received from the Superintendence of the Environment (SMA).