Appeal court suspends Nova Austral bankruptcy order
Debt-ridden Chile salmon farmer Nova Austral has been thrown a temporary lifeline by an appeals court that suspended a bankruptcy order imposed by a judge on May 13, reports Chilean paper La Tercera.
Almost 3,000 people in and around the town of Porvenir in the Magallanes region are said to rely on the Norwegian-owned company for direct and indirect employment.
Nova Austral has debts of US $559 million, and in January - after months of disagreement – Porvenir’s Court of Letters and Guarantee and a majority of the company’s creditors approved a 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 but feed producer Nutreco, which is owed $23m, and another creditor, smolt supplier Salmonera Dalcahue Limitada, successfully challenged the plan in the same court and asked the company to be made bankrupt instead.
Nutreco v Ewos
The Court of Appeals of Punta Arenas has now decided to freeze Nova Austral’s liquidation after another feed producer, EWOS, owned by US farming giant Cargill, presented a de facto appeal against the Porvenir court ruling.
Nutreco, represented by lawyer Fernando Urrutia, argued that Ewos does not have active standing to appeal the sentence since it did not participate in the original challenge, and requested that the appeal be rejected.
Dutch-owned Nutreco also questioned the order not to initiate Nova Austral’s bankruptcy, pointing out that the effects of the ruling that annulled the reorganisation agreement had already occurred and that the measure would only generate uncertainty.
'Serious errors'
Nova Austral has separately filed an appeal against the resolution that declared it bankrupt.
On that occasion, Novel Austral stated: “The sentence makes serious errors. It welcomed challenges to the reorganisation agreement because it considered them ‘contrary to the law’ and constituting an improper agreement, despite being approved with all the legal requirements, with the approval of more than two thirds of those discriminated against and in a deliberative meeting that was held in the presence of the court itself.”
It pointed out that the bankruptcy order process 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.
132 out of 136 said yes
"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.”
When requesting its reorganisation on June 22, 2023, Nova Austral indicated that its three largest creditors were Nordic Trustee ($415m); DNB Bank ($69m) and Nutreco/Skretting ($23m).
The company also maintained that its performance has been affected by a series of factors that have prevented the normal development of its business, including the harsh sanctions that it received from the Superintendence of the Environment (SMA).
