Credivalores: Prepackaged Note Exchange and Chapter 7 Conversion

Credivalores - Crediservicios S.A. filed chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York on May 16, 2024 to implement a prepackaged exchange of its U.S. dollar notes, as described in the company’s May 2024 press release. The filing followed an exchange offer and consent solicitation that the company announced in March 2024, with a proposal to swap the old notes into new secured notes due 2029, as outlined in the exchange offer announcement. The court confirmed the plan in early July 2024, as reflected in the Baker McKenzie summary of the plan approval, but court filings later show the plan never became effective and the case was converted to chapter 7 on July 7, 2025.

Credivalores is a Colombian non-bank financial institution focused on payroll deduction consumer loans under the Tucredito brand, with legacy lines in credit cards and insurance premium financing. Court filings describe a business model where employers deduct loan payments from wages and remit proceeds to the company, and the restructuring centered on those receivables as collateral. Rating agency updates in early 2024 pointed to refinancing risk ahead of the August 2025 maturity of the notes.

Debtor	Credivalores - Crediservicios S.A.
Court	U.S. Bankruptcy Court for the Southern District of New York
Case number	24-10837 (dsj)
Petition date	May 16, 2024
Chapter	chapter 11 (converted to chapter 7 on July 7, 2025)
Headquarters	Bogota, Colombia
Business	Payroll deduction consumer loans (Tucredito)
Restructuring path	Prepackaged exchange of Old Notes into New Notes due 2029
Confirmation date	July 3, 2024
Claims agent	Epiq Corporate Restructuring, LLC

Prepackaged exchange and plan confirmation

Credivalores structured its restructuring as a dual-path exchange: an out-of-court exchange offer paired with a prepackaged chapter 11 filing. The company launched the exchange offer in March 2024 and sought noteholder consents, describing a plan to exchange the existing 8.875% notes due 2025 for new secured notes due 2029. The SEC filing announcing the exchange offer outlined the terms, and a Baker McKenzie summary reported that the plan was approved after bondholders voted in favor. Court filings for the prepack solicitation reported even higher acceptance among those who voted, with more than 80% in number and over 96% in principal amount of voting noteholders supporting the plan.

The prepackaged structure follows a pattern used by Latin American issuers with U.S. dollar debt, where an exchange offer is paired with a court-supervised backup plan. The Baker McKenzie recap framed Credivalores’s transaction as a prepackaged exchange designed to bind non-participating holders while avoiding a prolonged in-court process.

The consent solicitation mechanics emphasized speed. The exchange offer and consent solicitation required noteholders to deliver instructions through DTC procedures, reflecting the public nature of the notes. The process was designed to lock in broad participation before the petition date and to allow the court to confirm the prepack based on a defined voting record.

The bankruptcy court confirmed the prepackaged plan in early July 2024. The Baker McKenzie recap reported that Judge David S. Jones approved the plan and that the exchange reduced the old notes by roughly 25%. External reporting around the exchange described a resulting issuance of about $165 million of new notes.

The confirmation order approved the disclosure statement and solicitation procedures and treated the Old Notes class as the only impaired voting class. Secured claims tied to receivables and general unsecured claims were treated as unimpaired and were scheduled to be paid or reinstated in the ordinary course, while equity interests were left in place. That structure is consistent with a prepackaged note exchange where the principal goal is to refinance the bond maturity rather than overhaul operating liabilities. It also meant that the cases success depended on completing the note exchange and meeting the plan effective date conditions rather than on renegotiating trade claims or operational contracts.\n\nThe plan documents also tied the exchange to DTC settlement mechanics, reflecting the publicly traded nature of the notes. This detail matters because it shows the restructuring relied on securities infrastructure rather than on bespoke bilateral noteholder settlements. The resulting structure was designed to move quickly from petition to confirmation, with the exchange offer used to secure most noteholder support before filing and the plan used to bind any holdouts once the case was commenced.\n

Capital structure and New Notes mechanics

The restructuring centered on the company's 8.875% senior notes due 2025. At the time of the exchange offer, the company reported about US$210.83 million of outstanding principal. Court filings show the plan offered holders $750 of new notes for each $1,000 of old notes, plus capitalized interest in the form of additional new notes. That exchange ratio was designed to reduce funded debt by roughly 25%, a reduction that also appears in adviser summaries of the transaction.

The new securities were described as senior secured step-up notes due 2029, secured by the company's Tucredito payroll loan receivables. External reporting on the exchange described an issuance of about $165 million of new notes and a step-up coupon structure. The new notes are secured by Tucredito receivables, consistent with the company's goal of tying creditor recoveries to its core cash flow source.

The step-up structure is a common feature in exchange-driven refinancings because it offers a higher coupon over time in exchange for near-term principal reduction. In Credivalores case, external reporting and adviser summaries described a roughly 25% reduction in the old notes, based on about $210.8 million of outstanding notes exchanged into roughly $165 million of new notes. This approach offered noteholders enhanced security and a later maturity, while giving the company time to stabilize its loan portfolio and manage collections in a high-rate environment.

The prepetition capital structure also included secured claims backed by receivables from the payroll loan and credit card portfolios. Court filings show about $94.7 million of secured claims outstanding as of April 30, 2024, with payment contemplated in full in the ordinary course as cash was collected or assets were sold. Those secured claims were classified as unimpaired under the plan, while the old notes were the only impaired voting class. This classification is typical for prepackaged note exchanges where the issuer focuses on the maturity wall while keeping operational secured financing in place.

The secured claim structure is important because it sits ahead of the exchanged notes in the cash flow waterfall. Court filings describe receivables-backed secured claims that are collateralized by payroll loan receivables and, in some cases, credit card receivables. These claims were not part of the note exchange and were expected to be repaid from portfolio collections or asset sales. That treatment preserved existing secured financing relationships while the company refinanced the unsecured notes into a secured instrument.\n\nThe filings also note that portions of the payroll loan portfolio were subject to specific security interests, including a security interest held by Citibank Colombia S.A. These arrangements, along with forbearance agreements with lenders tied to receivables financings, help explain why the prepack focused on the Old Notes rather than on a broader restructuring of operating debt. The plan structure preserved the receivables-backed facilities and used the chapter 11 process to bind Old Notes holders to the exchange terms.\n\n| Receivables-backed financing element | Collateral | Notes |\n| --- | --- | --- |\n| Secured claims (Class B) | Payroll loan receivables | Paid in full as collections are received |\n| Secured claims (Class B) | Credit card receivables | Legacy portfolio collateral |\n| Specific security interest | Portion of payroll portfolio | Citibank Colombia S.A. interest referenced in filings |\n| Forbearance arrangements | Receivables-backed facilities | Forbearance agreements with Clover and Gramercy affiliates |\n+ The filing materials also referenced forbearance agreements with lenders tied to the receivables-backed financings, including entities affiliated with Clover and Gramercy. Court filings noted a security interest held by Citibank Colombia S.A. in a portion of the payroll loan portfolio. These items highlight that the company entered the prepack with multiple layers of secured financing tied to the lending platform, with the note exchange structured as a refinancing of the unsecured notes into a secured instrument.

Operating model and payroll loan collateral

Credivalores is a non-bank lender that focuses on payroll deduction loans, known locally as libranzas. Under this model, the company contracts with employers to offer loans to employees and collects payments through direct payroll deductions. Court filings describe a process where the borrower authorizes the employer to deduct loan payments from wages, the employer remits those deductions to the lender, and the proceeds flow through trust accounts used for collections. The approach reduces delinquency risk because payments are captured at the payroll level rather than collected directly from borrowers after disbursement.

The company's flagship product is the Tucredito payroll loan, and court filings state that payroll loans represent a significant share of consumer lending in Colombia. The filings also note a legacy credit card business that was no longer originating new accounts and an insurance premium financing line that was closed to new origination in 2021. Optional insurance products were offered alongside payroll loans, generating fee income as a share of premiums. These legacy lines appear to be in runoff, with the payroll loan business remaining the primary operational focus.

Court filings also describe the company's geographic expansion, noting that Credivalores began serving clients in Cali and later expanded into other regions including Bogota. The borrower base is concentrated in employee segments that receive salary payments through employers willing to participate in payroll deduction programs. That distribution model gives the lender direct access to repayment streams and can lower delinquency risk relative to unsecured consumer lending, but it also creates reliance on employer participation and on regulatory standards governing payroll deductions. In practice, the flow of deductions through trust accounts is integral to the collateral package pledged to secured creditors.

Regulatory oversight in Colombia governs payroll deduction lending. The Superintendencia Financiera de Colombia regulates lenders and sets parameters for consumer credit, including interest rate ceilings and operational standards for non-bank entities. This regulatory framework, along with the payroll deduction mechanism, is one reason the company framed its receivables portfolio as a stable collateral base for the new notes. The company noted that the new secured notes would be backed by the Tucredito receivables, aligning the note collateral with the core cash flow source.

The loan collection structure is central to the restructuring. Court filings describe a master trust for payroll collections, with employers remitting loan payments into trust accounts. This mechanism matters because it defines how cash flows are captured and how collateral is monitored for secured creditors. It also provides a framework for pledged collateral to support the new notes and for secured claims to be repaid from portfolio collections.

Liquidity pressures, ratings, and sector context

Credivalores entered the restructuring with a U.S. dollar debt burden and a 2025 maturity wall. A Fitch report in May 2023 affirmed the company's rating and noted a US$58 million equity investment by GDA Luma that strengthened capitalization after losses in 2022. However, by January 2024, Fitch had downgraded Credivalores to CCC- on concerns over refinancing risk for the 2025 notes and the upcoming interest payment.

External reporting noted a missed interest payment of roughly $9 million in early 2024, a development that preceded the exchange offer and prepackaged filing. The exchange proposal and prepack filing can be read as a response to the near-term maturity wall and to a need to refinance the note obligations into a secured, longer-dated instrument.

The prepackaged approach provided a path to restructure the notes without a protracted contest over claims or collateral.

Company communications framed the exchange as a way to strengthen the balance sheet and complete the note swap through a court-approved process, while adviser summaries emphasized the roughly 25% principal reduction and the secured collateral package. This framing underscores that the exchange offer and the chapter 11 filing were not separate events but part of a single liquidity strategy built around the payroll loan portfolio.

Confirmation, effective date failure, and conversion to chapter 7

The court confirmed the plan on July 3, 2024, and company and adviser summaries described the exchange as reducing the old notes by roughly 25%. Even with confirmation, court filings later show that the plan never went effective. A U.S. Trustee motion filed in May 2025 stated that no notice of effective date had been filed and that quarterly fees remained unpaid, listing more than $140,000 due as of May 23, 2025.

The motion also referenced a parallel insolvency proceeding in Colombia and stated that the company could not assure payment of administrative expenses. The interplay between the U.S. prepack and a local Colombian process became a central issue in 2025. Colombia’s corporate regulator announced Credivalores’s admission to a Law 1116 reorganization process, with the company continuing operations while seeking protection in Colombia. That local proceeding likely required court approvals for certain expenditures and created timing mismatches with the U.S. case.

In July 2025, the U.S. bankruptcy court converted the case to chapter 7. The conversion order cited cause under section 1112(b) and directed the debtor to file schedules of unpaid postpetition debts and a final report. The U.S. Trustee appointed Salvatore LaMonica as interim trustee on July 8, 2025. The conversion shifted the case from a confirmed prepack to a liquidation-oriented phase for any remaining U.S. estate assets, reflecting the failure to consummate the confirmed plan.

The conversion also altered the governance structure. Instead of a reorganized debtor implementing a confirmed plan, a chapter 7 trustee became responsible for identifying and liquidating any remaining U.S. assets, reconciling claims, and distributing proceeds according to the statutory priority scheme. In practical terms, that means the exchange-driven plan no longer controls the U.S. process and the case proceeds under chapter 7 rules. The conversion order required updated schedules and a final report, signaling a wind-down of the chapter 11 process and a shift toward liquidation and claim administration.

Professionals and stakeholder roles

The restructuring involved cross-border counsel and a noteholder group. Law firm summaries described their roles in implementing the exchange and the confirmed plan, including a Cleary Gottlieb summary of the prepack and a Paul Hastings matter description for the noteholder group. This adviser mix reflects the cross-border nature of a Colombian issuer restructuring U.S. dollar notes in a U.S. court.

Advisor roles also illustrate how prepackaged cases manage speed. Counsel for the debtor and the noteholder group negotiated the exchange terms before the petition date, allowing solicitation to run in parallel with the court process. The involvement of Colombian counsel reflected the regulatory and operational footprint in Colombia, while U.S. restructuring counsel handled the confirmation, disclosure statement, and solicitation record. That coordination was essential for a transaction that combined public note settlement through DTC with a U.S. court order that bound non-consenting holders.

From a stakeholder perspective, the prepackaged approach allowed the company to engage noteholders in advance and minimize court time. The use of secured notes backed by Tucredito receivables aligned creditor recoveries with the company's core cash flow source. The claims and noticing agent role was handled by Epiq Corporate Restructuring, LLC, which maintained the claims register and managed notices throughout the case. The claims agent function is especially important in prepack cases because solicitation and voting records must be validated and because the plan confirmation relies on a clear record of acceptance.\n\nFor creditors, the claims agent is also the central repository for the claims register, notices, and case updates, which can be especially relevant in cross-border cases where stakeholders are split between U.S. and Colombian proceedings.

Frequently Asked Questions

When did Credivalores file chapter 11 and where was the case filed?

Credivalores filed chapter 11 on May 16, 2024 in the U.S. Bankruptcy Court for the Southern District of New York. The case number is 24-10837 (dsj), and the company’s May 2024 press release said the filing was intended to complete the exchange.

What was the exchange offer and why was it paired with chapter 11?

The company launched an exchange offer in March 2024 and paired it with a prepackaged filing to bind dissenting holders. The SEC filing announcing the exchange offer described the solicitation, while court filings show high acceptance among those who voted.

How did the exchange change the notes?

Holders of the old notes received new senior secured step-up notes due 2029 in exchange for $750 per $1,000 of principal, plus capitalized interest. External reporting described an issuance of about $165 million of new notes with a step-up coupon structure.

What collateral supports the new notes?

The new notes are secured by the Tucredito payroll loan receivables. The company described the notes as secured by its payroll loan portfolio in its exchange offer announcement.

Why was the case converted to chapter 7?

The U.S. Trustee moved to convert the case in May 2025, stating the plan had not gone effective and that quarterly fees were unpaid. The court converted the case to chapter 7 on July 7, 2025, and a chapter 7 trustee was appointed the following day.

Did Credivalores have a parallel proceeding in Colombia?

Yes. The company was admitted to a Colombian reorganization process under Law 1116, according to Colombia’s corporate regulator. The U.S. Trustee motion cited the Colombian proceeding as a factor affecting timing and approvals.

Who is the claims agent for Credivalores?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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