NY.- TV Azteca SAB told a court in New York that the Mexican broadcaster’s disgruntled creditors cannot force it into bankruptcy because the company does not own or operate anything of substance in the United States.
The producer of some of the most popular Spanish-language shows has been embroiled in court battles in the United States and Mexico with bondholders who say TV Azteca defaulted on more than $400 million in notes due next year.
Bondholders filed an involuntary bankruptcy case against the company on March 20 that would force it to negotiate a payment plan under the supervision of a US judge.
The debt dispute cannot be used for the company to file for Chapter 11, the company’s attorney, William A. Clareman, told US bankruptcy judge Lisa G. Beckerman during a hearing on Wednesday in a federal court in New York.
The company “has thousands of employees, the vast majority of whom are located in Mexico; the vast majority of its revenues come from Mexico; and its business depends on licenses issued by the Mexican government to broadcast television in Mexico,” TV said. Aztec in a court file. “Mexico is the only country that could credibly consider a restructuring of the TVA business.”
Bondholders Plenisfer Investments SGR SpA, Cyrus Capital Partners LP and Sandpiper Ltd argue that when TV Azteca borrowed $400 million in 2017, it agreed to submit debt disputes to a state or federal court in New York.
Instead, the company convinced a local judge in Mexico City last year to suspend interest payments on the bonds, creditors said in bankruptcy court documents.
The company, Mexico’s second-largest television network, and its units “have made it clear that they do not respect US law to which they have voluntarily submitted,” the bondholders’ lawyer, Abid Qureshi, said during the hearing.
missed payments
After defaulting on bond payments in the United States, the company paid its local Mexican creditors in full before its debt came due, costing TV Azteca more than $200 million, the bondholders say.
The bondholders and the company appeared in court in Manhattan for Beckerman to decide whether to order TV Azteca to comply with a stay of litigation that is routine in US bankruptcy cases. Beckerman said a lawsuit in Mexico may move forward to allow an appeal to be filed in the case.
Both sides will return to court in the coming weeks for Beckerman to decide whether the bankruptcy is legitimate or should be dismissed.
Negotiations have been thorny between creditors and the media company, controlled by Mexico’s third-richest man, Ricardo Salinas Pliego.
The defaulted dollar bonds, which matured in 2024, were trading at 42.25 cents on March 14, according to Trace data.
The company has said it is committed to negotiations with creditors.
Involuntary bankruptcy cases require a business to agree to take protection or fight creditors in court.
A group represented by the Bank of New York Mellon filed a lawsuit in a New York state court to force Azteca to pay some $490 million. The company transferred the case to a federal court in Manhattan, where it is stuck.
The broadcaster has failed to pay at least 1.32 billion pesos ($71 million) in bond payments, despite having 2.8 billion pesos in cash at the end of September, Fitch Ratings said in a report in January.
Bonds at Total Play Telecomunicaciones, another of Salinas’ companies, have also run into trouble as investors weigh whether the cable provider is spending too much as debt payments near.
