Banco del Orinoco Bankruptcy Proceedings: Grupo Cartera Proposes Composition Plan Amidst Legal and Financial Challenges

WILLEMSTAD – In a significant development in the ongoing bankruptcy proceedings of Banco del Orinoco N.V. (BDO), Cartera de Inversiones Venezolanas, C.A. (Grupo Cartera), the principal shareholder and beneficial owner of BDO, has submitted a Composition Plan to the Court of First Instance in Curaçao. The plan aims to resolve the bank’s bankruptcy through a judicial creditors' agreement, offering an alternative payment mechanism for creditors amidst a complex legal and financial landscape. 

The bankruptcy proceedings, which began in 2019, have been marked by prolonged uncertainty and legal challenges. Grupo Cartera, in collaboration with the court-appointed Receiver, has proposed a Creditors' Agreement under Articles 133 and following of the Curaçao Bankruptcy Decree. This agreement, if ratified, would provide a definitive solution for the liquidation of BDO’s assets and the settlement of its obligations to creditors. 

Challenges Posed by International Sanctions 

One of the key obstacles in the bankruptcy process has been the immobilization of BDO’s Securities Portfolio due to international economic sanctions against Venezuela. The sanctions, imposed by the United States, Canada, the United Kingdom, and the European Union, have severely restricted the bank’s ability to mobilize its assets. This has led to the closure of accounts with correspondent banks and custodians, further complicating the financial operations of BDO. 

In response to these challenges, Grupo Cartera has proposed a Composition Plan that includes alternative payment mechanisms for creditors, given the impossibility of directly using the Securities Portfolio. The plan, submitted to the court on December 1, 2023, and updated on September 27, 2024, outlines a framework for the safe and efficient recovery of creditor investments. 

Confidentiality Breaches and Legal Disputes 

The bankruptcy process has also been marred by disputes over confidentiality and communication protocols. In a letter addressed to the Court of First Instance, Victor José de Jesús Vargas Irausquin, President of Grupo Cartera, highlighted unauthorized disclosures of confidential information by the Receiver, which have jeopardized the relationship with the custodian of BDO’s Securities Portfolio, Farringdon Group. 

According to Vargas, the Receiver contacted Farringdon Group without the involvement of Grupo Cartera, in violation of the Memorandum of Understanding (MOU) signed on October 26, 2023. This unilateral action led to a breakdown in communication and trust, prompting Farringdon Group to forward all related documentation to its external attorneys for review. 

Grupo Cartera’s Commitment to Resolution 

Despite these challenges, Grupo Cartera has demonstrated its commitment to resolving the bankruptcy through the Composition Plan. In a show of good faith, the group withdrew two pending appeals related to the case in July 2024, allowing the process to move forward. The Receiver acknowledged this gesture in a communication to creditors, stating that the focus would now be on the liquidation of BDO through the proposed plan. 

Grupo Cartera has also complied with the court’s request to provide evidence of the existence of the Securities Portfolio. On October 11, 2024, Farringdon Group confirmed the portfolio’s status in a letter addressed to Grupo Cartera, which was subsequently forwarded to the Receiver. However, the Receiver deemed the information insufficient, leading to further tensions between the parties. 

Looking Ahead: A Path to Resolution 

As the bankruptcy proceedings continue, the focus remains on the implementation of the Composition Plan, which Grupo Cartera believes offers the best viable solution for all stakeholders. The plan includes provisions for cash payments to small creditors, guarantees, and compliance with Curaçao’s legal requirements. 

In his letter, Vargas emphasized the importance of direct communication between Grupo Cartera and the Receiver to rebuild trust and ensure the successful conclusion of the process. He proposed a meeting between the two parties to align strategies and finalize the details of the Composition Plan. 

The outcome of these discussions will be crucial for the creditors of BDO, who have been waiting for a resolution since the bank’s bankruptcy was declared in 2019. As the process moves forward, all eyes will be on the Court of First Instance in Curaçao and the parties involved to ensure a fair and equitable settlement for all stakeholders. 

Banco del Orinoco N.V. 

Banco del Orinoco N.V. (BDO) is a financial institution incorporated in Curaçao, with its principal shareholder being Cartera de Inversiones Venezolanas, C.A. The bank has been under bankruptcy proceedings since October 2019, following a court ruling in Curaçao. The case has drawn significant attention due to its complex legal and financial implications, particularly in light of international sanctions affecting Venezuelan entities. 

Grupo Cartera 

Cartera de Inversiones Venezolanas, C.A. (Grupo Cartera) is the principal shareholder and beneficial owner of Banco del Orinoco N.V. The group has been actively involved in the bankruptcy proceedings, proposing a Composition Plan to resolve the bank’s financial obligations and ensure the recovery of creditor investments.




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