The headquarters of TV Azteca in the south of Mexico City, on August 7, 2023.Daniel Augusto (Cuartoscuro)
Mexico’s third richest man, Ricardo Salinas Pliego, has won a battle against his creditors in the United States. Judge Lisa G. Beckerman dismissed the involuntary bankruptcy petition against TV Azteca filed last March by holders of $63 million in unsecured bonds because the company had suspended payments on a $400 million bond. “The court finds that the claims of the petitioning creditors are subject to a good faith dispute and that the Chapter 11 cases must therefore be dismissed,” the New York bankruptcy court judge ruled.
Salinas Pliego’s lawyers argued that the involuntary bankruptcy petition filed by Plenisfer Investments, Cyrus Opportunities and Sandpiper Limited last March amounted to a “tactical maneuver” related to litigation pending in the district court. In the presentation of its defense, TV Azteca also assured that Mexico is a “necessary and unique forum” in which a judicial restructuring of the alleged debtors can be carried out, assuring that Chapter 11 would only harm the creditors and the company itself.
While negotiating with the remaining creditors to reach an amicable agreement on a new payment plan, the Mexican millionaire won an important legal battle against that handful of creditors who tried to force the businessman through involuntary bankruptcy. According to the order published this Monday by the New York court, the applicant creditors are not the only parties to the contract and therefore cannot determine the debts from these documents.
The disagreement between US creditors and Salinas Pliego originated in 2017, when the company issued a 400 million bond with a seven-year maturity. However, in February 2021, the company announced the suspension of interest coupon payments due to insolvency issues resulting from the Covid-19 pandemic. Two years later, as those affected continued to face non-payment, they brought their claims to court, claiming involuntary bankruptcy.
With this ruling, Salinas Pliego brings a breath of fresh air to his chaos with his creditors in the United States, but the development of a new payment plan agreed with the remaining creditors is still in progress. At least the first attempt at this negotiation failed. The entrepreneur stated in writing that despite the arduous 67 days of work, an agreement had not been reached, but that he would insist on a new schedule. In this first failed attempt, the creditors demanded a cash payment of $105 million and an extension of the bond until 2030, while the businessman only proposed an initial cash payment of $45 million and a maturity of the split instrument in 2030.
The television station led by Salinas Pliego recognizes in its forecasts, included in its payment proposals to its creditors, the decline of the company in the face of strong competition from streaming platforms. According to the forecasts, cash flow in 2033 will be 1,660 million pesos, a decrease of 42% compared to 2022. This financial information was disseminated through its own channels since the Mexican Stock Exchange has suspended trading of TV Azteca shares since June last year.
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