Intrum (INTRUM.ST), Europe’s largest debt collector, announced on Friday that it will file for voluntary Chapter 11 bankruptcy protection in the United States to restructure its finances. The company has faced challenges as the pandemic, an energy crisis, and two-decade-high interest rates failed to trigger a wave of loan defaults. Concerns have grown over Intrum’s net debt, which reached 49.4 billion Swedish crowns ($4.69 billion) by the end of June.
Intrum stated, “We expect to emerge from the prepackaged Chapter 11 process and the Swedish company reorganization process with ample runway and liquidity to execute our business plan and position ourselves for long-term growth and success.” Following the announcement, shares in the company dropped by 2.8% at 0802 GMT.
The company secured support for a debt restructuring from 73% of its noteholders, which suffices for a U.S. Chapter 11 procedure but falls short of the 75% required for a simpler process under English law or the 90% threshold for an all-voluntary process. CEO Andres Rubio noted in July that achieving higher consent levels would simplify implementation and reduce costs, mentioning that 90% would be optimal while two-thirds serves as the bare minimum.
Intrum plans to initiate the Chapter 11 proceedings by mid-November and aims to obtain approval for the restructuring plan by year-end. The company anticipates that the recapitalization will take effect in the first quarter of next year.
This move comes as the debt collection industry in Europe faces significant challenges, including a substantial decline in non-performing loans, which has reduced the business volume available to these companies.
