WOM S.A.: Chilean Telecom Confirms Delaware Chapter 11 Plan

WOM S.A., Chile's second-largest mobile network operator, and five affiliates filed chapter 11 petitions in the District of Delaware on April 1, 2024, listing approximately $1 billion in debt. The case placed a primarily Chilean enterprise — with 8.5 million subscribers, 7,000 employees, and nearly all of its operations in Chile — inside a U.S. restructuring framework. WOM secured a $210 million DIP facility from JPMorgan to stabilize foreign vendor relationships while pursuing a plan-driven recapitalization. After resolving an early jurisdictional challenge and market-testing a potential sale, the debtors confirmed a plan on March 7, 2025 built around new secured and convertible notes, a rights offering, and a $72.5 million general unsecured creditor cash pool. The plan became effective on March 21, 2025.

Debtor(s)	WOM S.A. (6 jointly administered entities)
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	24-10628
Petition Date	April 1, 2024
Judge	Hon. Karen B. Owens
Confirmation Date	March 7, 2025
DIP Facility	$210 million multi-draw term loan; JPMorgan Chase Bank as agent; $100 million available on interim basis; 10% interest rate

Novator Partners' Nextel Chile Transformation

WOM, whose name derives from "word of mouth," took its current form in 2015 when private equity firm Novator Partners — led by Icelandic investor Thor Bjorgolfsson — acquired the assets of predecessor Nextel Chile. The First Day Declaration describes WOM as a Chilean telecommunications provider offering mobile voice, data, broadband, and fiber-to-the-home services that expanded from virtually no market share to becoming Chile's second-largest mobile network operator, with a 21% share of port-in market activity across pre-paid and post-paid customers.

As of December 2023, WOM reported more than 8.5 million subscribers and approximately 7,000 employees and independent contractors, all based in Chile. The company held approximately 25.8% of all spectrum available for mobile services in Chile across 3G, 4G, and 5G bands. WOM provided 4G network coverage to 99% of Chile through national roaming agreements and marketed services through 93 company-operated stores, 112 third-party retail locations, and digital channels that accounted for 35% of sales.

5G deployment and regulatory disputes. WOM was awarded five of six macro zones in a 2021 5G spectrum auction. As of September 2023, WOM had the largest 5G coverage area in Chile, with approximately one million customers on 5G broadband internet services. However, by an October 2023 deadline, WOM had completed only 80% of its buildout targets for three of the five zones. The Chilean telecommunications regulator SUBTEL disputed WOM's justifications for the delays — which the company attributed to social unrest, pandemic disruptions, and tower construction restrictions — and denied deadline extension requests. SUBTEL also threatened to call performance bonds issued in connection with the 5G project. WOM initiated international arbitration proceedings with the International Centre for Settlement of Investment Disputes in December 2023.

Tower monetization. In July 2022, WOM entered a sale-leaseback agreement with tower infrastructure operator Phoenix Tower International covering 3,800 network towers. WOM sold 2,597 towers in 2022 for $670 million, with $385 million distributed to shareholders and $285 million applied to debt repayment and operations. An additional 1,203 towers were scheduled for sale by the end of 2024. However, regulatory restrictions on new tower construction in certain areas prevented additional sales and deprived WOM of an estimated $25 million in liquidity in 2023.

Fitch Downgrade and Derivative Margin Calls

WOM entered chapter 11 with approximately $679 million of funded debt, roughly 95% of which was unsecured. The principal obligations included $356 million of 6.875% senior notes due 2024 and $293 million of 4.7% senior notes due 2028, both issued through co-debtor Kenbourne Invest S.A. The First Day Declaration separately described approximately $51 million associated with the EF securitization structure, which included approximately $39 million of outstanding principal obligations. The remaining funded debt included $10.9 million under a Banco de Crédito e Inversiones loan and $17.5 million of receivables-transfer obligations with the Inter-American Development Bank. WOM also identified approximately $337 million in unsecured debt owed to trade vendors, taxing authorities, employees, and contract counterparties.

Ratings downgrades and derivative exposure. The First Day Declaration attributed the liquidity crisis to a combined squeeze driven by 2023 ratings downgrades, derivative margin calls, the shrinkage and ultimate loss of the IDB credit facility, and delays in the 5G deployment program that undermined expected liquidity initiatives. A March 2023 Fitch downgrade of the 2024 and 2028 unsecured notes triggered margin calls on CLP/USD derivative contracts, resulting in more than $35 million of cash expenditures between April and November 2023. WOM subsequently spent approximately $41 million more to close out the remaining hedged positions. The downgrade also caused IDB to reduce WOM's credit facility from $100 million to $50 million. After a second downgrade in November 2023, IDB closed the facility entirely, forcing WOM to commit approximately $35 million to repay the remaining balance between November 2023 and March 2024.

Failed refinancing attempts. Before the chapter 11 filing, WOM engaged Rothschild & Co as investment banker to pursue a capital raise to redeem the 2024 notes, which were approaching their November 2024 maturity. The company also retained Riveron and other restructuring advisors to explore a broader debt restructuring. WOM evaluated several out-of-court options, including a capital raise and an exchange offer. The discussions with an ad hoc group of noteholders included a potential exchange in which the 2024 notes would be swapped at par and the 2028 notes at 80%, combined with a $92.5 million bridge financing. None of the out-of-court proposals met WOM's requirements or could be executed within the necessary timeframe.

Chilean enforcement actions. As of the petition date, certain Chilean creditors had initiated at least six executive proceedings and made at least two attempts to force WOM into liquidation proceedings in Chile. Financial services provider Siete Cumbres Factoring filed an involuntary liquidation request that it withdrew in mid-March 2024. The debtors filed a motion to affirm the Bankruptcy Code's worldwide automatic stay, arguing that many creditors with no U.S. ties might otherwise pursue enforcement actions that could require separate insolvency proceedings in Chile.

JPMorgan $210 Million DIP Facility

WOM obtained a $210 million multi-draw DIP facility with JPMorgan Chase Bank as agent and TMF Group New York as collateral agent. The DIP Motion described terms including a 10% cash-pay interest rate, a 2% default-rate premium, a 1% exit fee, a 3% unused commitment fee, and a 1% maturity extension fee, plus additional facility and agent fees totaling up to $6.4 million.

The facility made $100 million available on an interim basis. The maturity was tied to the earliest of July 1, 2025 (subject to a 90-day extension), a plan effective date, a sale of substantially all assets, acceleration, or conversion to chapter 7. The DIP automatically matured 45 days from the petition date if final approval had not been obtained.

Use of proceeds. Up to $40 million of initial DIP proceeds was earmarked to repay the EF securitization facility in full. Approximately $103 million would fund payments to critical foreign vendors and service providers — a feature the debtors described as essential given that many counterparties had no U.S. ties and might pursue enforcement in Chile absent payment. Rothschild managing director Marcelo Messer stated that without these payments, Chilean creditors could force separate insolvency proceedings in Chile, depriving the debtors of their ability to obtain the same level of financing.

Collateral and covenants. The DIP was secured by first liens on all previously unencumbered property, including equity interests, intellectual property, intercompany loans, real property, WOM's fiber optic infrastructure and hardware networks, and the economic value of spectrum concessions. The facility imposed a $25 million minimum-liquidity covenant and a negative pledge on WOM's spectrum assets. The facility did not include priming liens, roll-ups of prepetition debt, or case milestones.

Adequate protection. The DIP Motion described an adequate-protection package that included superpriority administrative expense claims, first-priority replacement liens on unencumbered assets, junior replacement liens on otherwise encumbered assets, and a professional-fee carve-out. The carve-out reserved funds for statutory fees and allowed professional expenses of the estates and any official committee to be paid notwithstanding the DIP lenders' superpriority claims.

Competing proposals. An ad hoc group of WOM bondholders represented by Dechert, with Ducera as financial advisor, submitted an alternative DIP proposal. The debtors evaluated five proposals received in late March 2024 and elected the JPMorgan facility. Messer described the JPMorgan proposal as the "highest and best" option, emphasizing JPMorgan's ability to "work cooperatively" with the debtors.

The Final DIP Order authorized the full $210 million facility.

Noteholder Jurisdictional Challenge

An ad hoc group of WOM noteholders moved to dismiss the chapter 11 cases or, in the alternative, appoint a chapter 11 trustee. The motion argued that WOM lacked sufficient U.S. connections for chapter 11 relief, that court orders would be largely unenforceable against Chilean stakeholders absent recognition in Chile, and that the filing was being used tactically by equity holders to maintain control of the restructuring process. The trustee alternative was grounded in alleged conflicts of interest between WOM's equity sponsors and the broader creditor body.

The dismissal motion was a significant early-case contested matter. Had it succeeded, the debtors would have lost access to the U.S. restructuring framework and the $210 million DIP facility, potentially forcing separate insolvency proceedings in Chile. By late July 2024, the debtors' exclusivity extension motion described the dismissal motion as resolved, indicating that the parties had reached an accommodation that allowed the case to proceed past the jurisdictional challenge before plan negotiations advanced.

América Móvil–Telefónica Acquisition Exploration

Although WOM ultimately pursued a plan-driven restructuring, the debtors filed a bidding procedures motion in mid-2024 to market-test whether a sale transaction could maximize value. The proposed timeline set a September 20, 2024 stalking-horse designation deadline, a September 27, 2024 stalking-horse objection deadline, an October 18, 2024 bid deadline, and a November 1, 2024 auction if qualified bids emerged. Qualified bids required a 10% good-faith deposit, and the motion contemplated breakup-fee and expense-reimbursement protections for any designated stalking horse.

Separately, América Móvil — the telecommunications group controlled by Carlos Slim — and Telefónica entered a non-binding agreement in September 2024 to explore the potential joint acquisition of WOM's Chilean assets. The two companies cited potential benefits for Chile's telecommunications sector, including enhanced investment capacity for high-speed networks. Chile's national economic prosecutor (FNE) reviewed the proposed transaction for potential competition concerns, given that América Móvil's subsidiary Claro and Telefónica's subsidiary Movistar already operated in the Chilean market alongside WOM. The case ultimately resolved through the confirmed plan rather than a completed sale.

Convertible Notes and GUC Cash Pool

The Amended Disclosure Statement described a restructuring built around three components: $95 million of new money new secured notes, up to $405 million of new money new convertible notes, and a $72.5 million general unsecured creditor cash pool, subject to plan reductions. The new money new secured notes and new money new convertible notes were to be issued through a rights offering available to holders of the Kenbourne-issued unsecured notes, with backstop commitments from commitment parties ensuring full subscription.

Class 3 — Unsecured notes claims. Holders of the Kenbourne-issued unsecured notes would receive new holdco equity, $225 million of take-back new secured notes, and subscription rights to participate in the rights offering for the new money notes. The take-back secured notes represented a partial recovery on the approximately $649 million of combined face value of the 2024 and 2028 notes. The disclosure statement estimated overall Class 3 recoveries of 43% to 46%.

Class 4 — General unsecured claims. General unsecured creditors would receive a pro rata share of the $72.5 million GUC cash pool and Plan Trust interests, with an option for eligible holders to elect the secured-notes/equity treatment available to Class 3 instead. The GUC cash pool was funded on the plan effective date from reorganized-debtor resources. Estimated recoveries ranged from 29% to 34%.

Plan Trust. The Third Amended Plan defined $3 million of Plan Trust funding on the effective date to support trust costs and the reconciliation of Class 4 general unsecured claims. The Plan Trust was established to hold, administer, liquidate, and distribute trust assets for the benefit of Class 4 claimants. The Plan Trust's scope included objecting to disputed claims, distributing GUC cash pool proceeds as claims were resolved, and pursuing any causes of action assigned to the trust under the plan.

Cramdown Confirmation and Third-Party Releases

The disclosure statement was approved on January 23, 2025, and the solicitation period followed. The solicitation-version amended plan incorporated the final terms that went to a creditor vote. The court entered a Confirmation Order on March 7, 2025. Classes 3 and 4 voted to accept the plan, while Classes 5 (intercompany claims) and 6 (existing equity interests) were impaired and deemed to reject. Confirmation therefore proceeded with section 1129(b) cramdown findings as to the rejecting classes, with the court finding that the plan did not discriminate unfairly and was fair and equitable as to each non-accepting impaired class.

Release and exculpation provisions. The Confirmation Order approved debtor releases as integral to and negotiated in good faith as part of the overall plan settlement. The court approved third-party releases on a consensual opt-in basis, meaning only creditors who affirmatively elected to grant the releases — or who did not opt out during the solicitation period — were bound. The exculpation provisions protected the debtors, the reorganized debtors, and certain other parties from liability for acts during the case, subject to carve-outs for actual fraud, willful misconduct, and gross negligence.

The plan became effective on March 21, 2025. On the effective date, the debtors completed the new money transactions, the rights offering closed, the new secured and convertible notes were issued, and the GUC cash pool was funded.

$85 Million Professional Fee Awards

The omnibus final fee order entered on June 10, 2025 approved final professional compensation across the case:

White & Case LLP	$30,559,234
Rothschild & Co US Inc.	$15,750,000
Riveron RTS, LLC	$9,879,513
Richards, Layton & Finger, P.A.	$8,871,945
Besa y Cia. Ltda.	$7,764,844
FTI Consulting, Inc.	$6,651,531
Kroll LLC	$4,500,000
McDermott Will & Emery LLP	$967,205
Jefferies LLC	$280,983
Morales Abogados SpA	$189,552

White & Case LLP served as general bankruptcy counsel. Rothschild & Co served as investment banker. Riveron RTS provided restructuring advisory services, with managing director Robert Wagstaff serving as chief restructuring officer. Richards, Layton & Finger served as local Delaware counsel. Besa y Cia. Ltda. served as Chilean counsel. FTI Consulting served as financial advisor. Kroll LLC served as claims and noticing agent. McDermott Will & Emery served as special counsel.

Multikom S.A. as Sole Remaining Debtor

On June 12, 2025, the court entered a final order closing five of the six chapter 11 cases — Kenbourne Invest S.A., NC Telecom II AS, WOM Mobile S.A., WOM S.A., and Conect S.A. Multikom S.A. remains open as the sole remaining case for claims administration and Plan Trust matters. The order directed that all remaining contested matters and Plan Trust matters for the closed debtors proceed in the remaining Multikom case, and it modified the caption to identify Multikom S.A. as the reorganized debtor.

Claims administration and Plan Trust activity. The Plan Trust was established on the March 21, 2025 effective date to hold, administer, and distribute trust assets and to reconcile Class 4 general unsecured claims. The Plan Trust's original claims-objection deadline was September 17, 2025. A September 2025 motion by the WOM Plan Trust and reorganized debtors stated that reconciliation work on Class 4 general unsecured claims remained ongoing, and the trust sought extensions of both the claims-objection deadline and the administrative-claims-objection deadline. The court granted an extension to March 16, 2026.

The Plan Trust filed its first omnibus non-substantive objection to certain late-filed claims on November 5, 2025, and the court sustained that objection on December 9, 2025.

Post-emergence 5G compliance. After emerging from chapter 11, the reorganized WOM completed its 5G network rollout obligations in Chile. WOM paid a $52 million settlement to the State Defense Council to resolve the prepetition 5G deployment breaches that had contributed to the SUBTEL regulatory dispute. The settlement resolved the regulatory exposure that the First Day Declaration had identified as one of the triggers for the chapter 11 filing.

Frequently Asked Questions

What was the outcome of the WOM S.A. chapter 11 case?

WOM confirmed a plan of reorganization on March 7, 2025, built around new secured and convertible notes, a rights offering, and a $72.5 million cash pool for general unsecured creditors. The plan became effective on March 21, 2025. Five of six debtor cases were closed on June 12, 2025, with Multikom S.A. remaining open for claims administration.

Who is the claims agent for WOM S.A.?

Kroll 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.

What were the estimated creditor recoveries?

The amended disclosure statement estimated recoveries of 43% to 46% for Class 3 unsecured notes claims and 29% to 34% for Class 4 general unsecured claims.

Why did WOM file in the United States?

WOM is a Chilean company that filed chapter 11 in Delaware. An ad hoc group of noteholders challenged the U.S. filing on jurisdictional grounds, but the motion was resolved before plan negotiations advanced. The debtors also sought to affirm the automatic stay's worldwide applicability to prevent Chilean enforcement actions during the case.

For more bankruptcy case coverage, visit the ElevenFlo bankruptcy blog.