Grupo Famsa secures court approval of Chapter 11 case dismissal motion

By Caroline Salls

Pittsburgh, Aug. 11 – Grupo Famsa SAB de CV’s Chapter 11 bankruptcy case was dismissed Monday by the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, Famsa filed a Chapter 11 bankruptcy case on June 26, but withdrew its pre-packaged plan of reorganization and asked the court to dismiss that case last month. The company made a Chapter 15 bankruptcy filing on Aug. 7.

According to a July 7 letter to judge Shelley C. Chapman, Mexico’s Comision Nacional Bancaria y de Valores intervened in connection with non-debtor subsidiary Banco Famsa.

Grupo Famsa said the bank had provided significant support to the debtor’s retail business before the intervention in the form of credit made available to Grupo Famsa’s retail customers.

“In the absence of such credit support to the debtor’s retail customers (and likely negative impact on the retail business), the debtor’s management has determined that the most prudent course of action is to conserve liquidity in order to ensure that the debtor’s retail business can continue uninterrupted,” the letter said.

As a result, Grupo Famsa did not make a scheduled interest and principal amortization payment due on some of its credit lines. The company said these obligations had been classified as unimpaired under the pre-packaged plan.

The company said in documents filed in the Chapter 15 case that as a consequence of the intervention against Banco Famsa, the Grupo Famsa and its subsidiaries have continued to experience a combination of liquidity and revenue issues, challenges to retail operations, arrears in payments to creditors and suppliers and limited access to long-term refinancing.

Famsa said it filed a concurso mercantil insolvency proceeding in Mexico as a result of these issues. The company said this proceeding will allow it to attempt to right-size its balance sheet and address its financial and operational issues.

In addition to enforcing the orders entered in the Mexican proceeding, the company said the Chapter 15 filing will impose a stay of litigation against Famsa in the United States, including any action based on defaults that exist under its 2020 and 2024 notes.

Grupo Famsa is a retail company based in Monterrey, Mexico. The Chapter 15 case number is 20‐11811.

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