(Bloomberg) — A US bankruptcy judge has confirmed the debt restructuring plan of Sweden’s Intrum AB despite the opposition from a minority group of creditors, clearing a major obstacle for the debt collector.
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“Nothing here was intended to defraud or to intentionally designed to harm a particular creditor group,” Judge Christopher Lopez said Tuesday. “This was a good faith filing.”
The ruling came after a days-long hearing in Texas, where attorneys of Intrum and opposing creditors argued over the validity of the company’s US bankruptcy filing.
Lopez said he found there was “current financial distress” in Intrum’s case, striking down one of the arguments from the opposing group. He added that creditors owed more than $3.5 billion voted to accept the plan.
“If this restructuring is done, it’s going to preserve the debtor’s ability to operate as a going concern,” company attorney Andrew M. Leblanc had said at an earlier hearing. Only 6% of creditors stood at the court to object the plan, he added.
Benjamin Finestone, an attorney for holders of Intrum notes due 2025, had said US bankruptcy courts have consistently dismissed petitions filed by financially healthy companies with no need to reorganize in Chapter 11. He argued that Intrum had “no liquidity issue,” “no business in the US” and “no financial distress.”
A last-minute deal between the opposing holders and Intrum was struck and fell apart within one day earlier this month, leading to a contentious hearing. The group, of which members include Diameter Capital Partners, had argued before that the plan doesn’t reflect that their bonds were temporarily first in line of repayment.
The group contended during an earlier hearing that there was no international agreement to honor any order of the US bankruptcy court. A restructuring must be approved in Sweden, they alleged.
Intrum in November sought court protection in Texas to deal with a debt pile that became unwieldy after interest rates rose. The company reached a deal to restructure its 58.4 billion krona ($5.3 billion) debt pile earlier this year with the support of 82% of its creditors.
The case is Intrum AB, 24-90575, US Bankruptcy Court, Southern District of Texas.
(Updates with details in the second, fourth and eighth paragraphs.)
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