Intrum, the largest debt collection company in Europe, has announced that it has filed for Chapter 11 bankruptcy protection in the United States in an attempt to restructure its debt.
The company has faced challenges as the pandemic, energy crisis, and high interest rates over the past two decades have not led to a wave of defaults, with growing concerns about Intrum’s net debt, which reached 49.4 billion Swedish kronor ($4.49 billion) at the end of September.
Intrum, which announced last month its intention to file for Chapter 11 protection, has listed assets and liabilities in the range of $1 to $10 billion and estimated the number of creditors between 1,000 and 5,000, according to a document filed in court.
“With the support of the overwhelming majority of our key stakeholders, we are making significant progress towards implementing our recapitalization operation,” said Andres Rubio, CEO of Intrum.
Intrum has garnered the support of 73% of its creditors for the debt restructuring, which is enough for a Chapter 11 proceeding in the US, but insufficient to reach the 75% required for a simpler procedure under English law or the 90% threshold for a fully voluntary procedure.
The company stated that it plans to continue operating normally, without any interruption of services, and has sufficient liquidity to carry on its activities and implement its business plan throughout the Chapter 11 process.
Intrum mentioned that it will retain control of its assets, as well as its management team and board of directors during the bankruptcy procedure.
This move by Intrum comes at a time when the debt collection sector in Europe is facing challenges, with a significant decrease in non-performing loans reducing the available business volume for these companies.
Intrum aims to complete the Chapter 11 process before the end of the year and is also considering a reorganization of the Swedish business in the first quarter of 2025.
The company’s decision to file for bankruptcy protection reflects the financial struggles it has been facing and its efforts to restructure its debt to ensure its long-term viability in the debt collection industry.
