Aldesa Corporación de Inversiones will have to explore other possibilities to reorganize the payment to its investors and avoid bankruptcy, after reporting illiquidity problems that affect their real estate project business.

Judges ratified that the company could not prove the successful notification of a total of 200 creditors of Aldesa Corporación de Inversiones, within the established term; the company may now be headed for bankruptcy unless it can find other legal ways to pay back investors

On August 7, the Tribunal Segundo de Apelación Civil de San José (Second Court of Civil Appeal of San José) reaffirmed what the Bankruptcy Court had previously decided on the impossibility of opening a judicial intervention process (a process akin to a Chapter 11 in the U.S.) because Aldesa Corporación de Inversiones could not prove that it successfully notified all its creditors in the established term.

The judgment of the court of appeals states that it was not possible to continue with Aldesa’s request because the firm presented incomplete, disorderly documentation and that it was difficult to verify that it successfully notified its more than 200 creditors involved.

“In complex cases such as this one, a high level of cooperation is required by stakeholders. Their efforts must not only be clear and concrete, but also the information and documentation presented must be ordered and simple to verify,” said the court.

Although the court acknowledges that it is difficult to duly notify all creditors because some are outside the country, it also noted that the submission of documents was incomplete and in some cases late.

The Aldesa Group had to complete the notifications to all its affected investors within five days after the submission of the request.

The court judges Deyanira Martínez, Carlos Dalolio and Farith Suárez, in their resolution, argued that Aldesa Corporación de Inversiones ignored specifying the dates on which it delivered each communication, among other omissions.

Though several investors who contacted the Q said they had received a letter from Aldesa of the court decision, the company, however, indicated, this Saturday, August 10, that it has not yet received the official court notification.

The president of Aldesa, Javier Chaves, was arrested on Monday, June 10, 2019 following a raid on his home and Aldesa offices.

“We are assessing the legal options we still have to pay all investors and avoid bankruptcy, which would directly harm creditors. On Monday we will be issuing an official statement on that matter,” said the company.

On March 8, Aldesa said that if it could move forward in the approval of the legal process it would work in an accelerated way to execute the rescue plan, monetize the real estate projects and honor the commitments with its creditors; but that if the judgment of the Court of Appeal was negative – as finally occurred- the option would be a bankruptcy process that would cause irreparable harm to all involved.

The company’s objective was to obtain permission to suspend payments, for a term of three years, and at lower interest rates, to a group of more than 500 clients of the private real estate project business for investments of US$200 million.

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