Condor Inversiones eyes case dismissal following Mainstream settlement

By Sarah Lizee

Olympia, Wash., Oct. 23 – Condor Inversiones SpA is asking the U.S. Bankruptcy Court for the Southern District of Texas to approve the voluntary dismissal of its Chapter 11 bankruptcy case now that it has reached a settlement with Mainstream Renewable Power.

As background, Mainstream Renewable Power initiated a judicial reorganization for Huemul Energia SpA and Condor Energia SpA in late July.

In August, Condor Inversiones and Huemul Inversiones SpA, intermediate holding companies of Huemul Energia and Condor Energia, filed the Chapter 11 cases.

However, Mainstream quickly moved to dismiss the cases, saying that it is the sole administrator of Condor Inversiones and Huemul Inversiones, and that it did not authorize the Chapter 11 petitions.

The Chapter 11 debtors and mezzanine lender Ares Management argued that Mainstream had breached its fiduciary duties by “surreptitiously and fraudulently converting and diluting the Inversiones debtors’ assets in order to enrich itself as equity sponsor while leaving the debtors and their creditors in the cold.”

However, following negotiations between the parties, a settlement was reached in early September, through which the parties agreed to resolve all of their disputes.

The settlement would aim to do the following:

• Reduce the principal amount of secured debt that the debtors will guarantee and amend and restate the mezzanine credit agreement;

• Facilitate investment of up to an additional $145 million of new capital in the Inversiones debtors' subsidiaries, thus increasing the value of the equity that the Inversiones debtors have in their subsidiaries;

• Provide for the funding of up to $9.2 million in cash by Mainstream to the Ares lenders and the debtors to fund the professional fees and expenses incurred by the Ares lenders and the debtors, including by using commercially reasonable efforts to have $5.8 million in cash held by Mezzanine Renewable Power Finance DAC to be applied to the same;

• Provide for the dismissal of the adversary proceeding;

• Provide that Mainstream and Wilmington, as collateral agent under the mezzanine credit agreement, will take necessary steps in New York, Chile, Ireland and Spain to withdraw, dismiss or otherwise resolve any pending litigation and insolvency and similar proceedings related to the matters covered by the settlement agreement; and

• Provide for mutual releases between and among the parties.

While the Inversiones debtors are not party to the Energia subsidiaries' restructuring cases in Chile, closing of the settlement transactions will also allow the consummation of the Chilean restructuring plans and the treatment of the project finance lenders' claims against those subsidiaries, Condor Inversiones said.

The Santiago, Chile-based debtors filed bankruptcy under lead Chapter 11 case number 23-90761.

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