Compania de Alimentos Fargo involuntary Chapter 11 case dismissed

By Caroline Salls

Pittsburgh, Oct. 15 - Compania de Alimentos Fargo, SA's involuntary Chapter 11 bankruptcy case was dismissed, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the company asked the court to dismiss the case on Nov. 30, 2006 in light of its lack of contact with the United States.

According to the motion, there is no real possibility that Fargo can be reorganized under Chapter 11 and Fargo has no meaningful contact with the United States.

The company said the petitioners, which are four non-U.S. investment funds, "do little to disguise the fact that their sole intent in filing the involuntary petition is not to reorganize Fargo under the auspices of the court, but rather to create a forum in which they can collaterally attack and frustrate the efforts of the courts in Argentina that are overseeing the company's reorganization in that country."

Fargo said it has no U.S. office, bank account, equipment, operations, employees or sales representatives and most of its creditors are located outside the United States.

The company said its sole U.S. assets are one registered U.S. trademark and three pending trademark applications.

The involuntary Chapter 11 filing was made on Sept. 11, 2006 by Fargo bondholders the Rainbow Global High Yield Fund, Argo Capital Investors Fund SPC, the Star Fund and the Rainmac Fund, which hold more than 65% of Fargo's 13¼ senior notes due 2008.

The petitioning creditors objected to the case dismissal on April 30, arguing that their claims are not recognized in Fargo's Argentine bankruptcy proceedings.

However, in his case dismissal ruling, judge Stuart M. Bernstein said Fargo has proven that the Argentine insolvency proceedings are fair and provide "a suitable forum to adjust the rights of the parties."

In addition, Bernstein said Fargo agreed in August to allow the petitioning creditors' indenture trustees to vote the full amount of their debt in the company's reorganization cases, instead of limiting the voting power under a previous voting rights ruling.

"Perhaps more importantly, the petitioners fail to explain what a confirmed Chapter 11 plan would accomplish," Bernstein said in his ruling.

"As noted, Fargo has no business or assets in the United States to reorganize. Instead, someone would have to take the confirmed plan to Argentina, and ask the local courts to [recognize] the Chapter 11 plan.

"Fargo should be reorganized in Argentina - without this court's oversight or interference."

Compania de Alimentos Fargo is a Buenos Aires-based producer and distributor of packaged bread and bakery products in Argentina. Its Chapter 11 case number is 06-12128.

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