Case 24-10628-KBO Doc 7 Filed 04/01/24 Page 1 of 59
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`IN THE UNITED STATES BANKRUPTCY COURT
`FOR THE DISTRICT OF DELAWARE
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`In re
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`Chapter 11
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`WOM S.A., et al.1
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`Case No. 24-______ (___)
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`Debtors.
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`(Joint Administration Requested)
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`DEBTORS’ MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS
`(I) AUTHORIZING THE DEBTORS TO (A) CONTINUE USE OF
`EXISTING CASH MANAGEMENT SYSTEM BANK
`ACCOUNTS, AND BUSINESS FORMS AND (B) PAY RELATED
`PREPETITION OBLIGATIONS; (II) WAIVING CERTAIN DEPOSIT
`REQUIREMENTS; AND (III) AUTHORIZING CONTINUANCE
`OF IDB TRANSFERS, EF TRANSFERS, AND INTERCOMPANY TRANSFERS
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`The above-captioned debtors and debtors-in-possession (collectively, the “Debtors” or the
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`“Company”) state as follows in support of this motion (this “Motion”):
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`Relief Requested
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`The Debtors seek entry of an interim order (the “Proposed Interim Order”),
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`substantially in the form attached hereto as Exhibit A, and a final order (the “Proposed Final
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`Order,” and together with the Interim Order, the “Orders”), substantially in the form attached
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`hereto as Exhibit B: (a) (i) authorizing (a) the Debtors to maintain their existing cash management
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`system and waiving certain requirements set forth in the U.S. Department of Justice, Office of the
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`United States Trustee: Guidelines for Debtors-in-Possession (the “U.S. Trustee Guidelines”),
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`The Debtors in these chapter 11 cases (these “Chapter 11 Cases”), and each Debtor’s federal tax identification number in
`their applicable jurisdiction of incorporation, are as follows: Kenbourne Invest S.A. (“Kenbourne”) (2018 2206 815); NC
`Telecom II AS (“NCT II”) (59.208.720-0); WOM Mobile S.A. (“WOM Mobile”) (99.517.000-0); WOM S.A. (“WOM”)
`(78.921.690-8); Conect S.A. (“Conect”) (96.965.220-k); and Multikom S.A. “Multikom”) (78.456.640-4). The location of
`the Debtors’ service address in these Chapter 11 Cases is: General Mackenna No. 1369, Santiago, Chile.
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`Case 24-10628-KBO Doc 7 Filed 04/01/24 Page 2 of 59
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`(b) the payment of related prepetition obligations, and (c) the Debtors’ continued use of business
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`forms; (ii) waiving certain requirements relating to bank accounts under section 345(b) of the
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`Bankruptcy Code; (iii) authorizing the continuation of IDB Transfers (as defined below) in the
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`ordinary course of business; (iv) authorizing the continuation of EF Transfers (as defined below)
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`in the ordinary course of business; and (v) authorizing the continuation of Intercompany Transfers
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`(as defined below) between Debtors in the ordinary course of business and granting administrative
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`expense priority status to postpetition claims against the Debtors by other Debtors arising from
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`Intercompany Transfers (the “Intercompany Claims”).
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`As further set forth herein, the Debtors also request that all applicable banks and
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`other financial institutions be authorized to honor, process, and effect payments related to the Cash
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`Management Claims (as defined herein). In addition, the Debtors request that the Court schedule
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`a final hearing (the “Final Hearing”)2 to consider approval of this Motion on a final basis and
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`entry of the Proposed Final Order.
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`In support of this Motion, the Debtors rely upon and incorporate by reference the
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`Declaration of Robert Wagstaff in Support of Debtors’ Chapter 11 Petitions and Requests for First
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`Day Relief (the “First Day Declaration”),3 filed contemporaneously herewith.
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`For the reasons set forth herein, the Debtors submit that the relief requested is in
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`the best interest of the Debtors, their estates, creditors, and other parties in interest, and therefore
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`should be granted.
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`Such period between the date this Motion was filed and the Final Hearing shall be the “Interim Period.”
`3 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the First Day
`Declaration.
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`Jurisdiction, Venue, and Predicates for Relief
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`The United States Bankruptcy Court for the District of Delaware (the “Court”) has
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`jurisdiction to consider this Motion under 28 U.S.C. §§ 157 and 1334 and the Amended Standing
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`Order of Reference, dated February 29, 2012 (Sleet, C.J.). This is a core proceeding under 28
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`U.S.C. § 157(b). Venue of these Chapter 11 Cases and this Motion in this District is proper under
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`28 U.S.C. §§ 1408 and 1409.
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`The predicates for the relief requested by this Motion are sections 105(a), 345(b),
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`363, 364, 503(b), 507 and 541 of title 11 of the United States Code (the “Bankruptcy Code”),
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`Rules 6003 and 6004 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”),
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`and Rules 2002-1, 2015-2(b) and 9013-1(m) of the Local Rules of Bankruptcy Practice and
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`Procedure of the United States Bankruptcy Court for the District of Delaware (the “Local
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`Bankruptcy Rules”).
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`Pursuant to Local Bankruptcy Rule 9013-1(f), the Debtors consent to the entry of a
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`final judgment or order with respect to this Motion if it is determined that this Court lacks
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`Article III jurisdiction to enter such final order or judgment absent consent of the parties.
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`I. Overview of Chapter 11 Cases
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`Background
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`On April 1, 2024 (the “Petition Date”), each of the Debtors filed a voluntary
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`petition for relief under chapter 11 of the Bankruptcy Code with the Court. The Debtors continue
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`to operate their business and manage their properties as debtors-in-possession pursuant to sections
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`1107(a) and 1108 of the Bankruptcy Code. Concurrently with the filing of this Motion, the Debtors
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`have requested procedural consolidation and joint administration of these Chapter 11 Cases
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`pursuant to Bankruptcy Rule 1015(b). No creditors’ committee has been appointed by the Office
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`of the United States Trustee for the District of Delaware (the “U.S. Trustee”), nor has a trustee or
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`examiner been appointed in these Chapter 11 Cases.
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`The Company is one of the fastest growing and market-leading telecommunications
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`providers in Latin America and has been the second-largest mobile network operator in Chile since
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`2019. The Company reaches over 8.5 million customers and provides prepaid and post-paid
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`mobile voice, data, and broadband services, along with a rapidly expanding “Fiber to the Home”
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`broadband offering to consumers and businesses in Chile. The Company’s 5G wireless broadband
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`services deliver internet access to approximately one million customers, with a coverage area that
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`spans over 18 million people. The Company employs, directly or indirectly, approximately 7,000
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`people in Chile.
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`Additional factual background and information regarding the Debtors, including
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`their business operations, their corporate and capital structure, and the events leading to the
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`commencement of these Chapter 11 Cases, is set forth in detail in the First Day Declaration.
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`II. Cash Management System
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`A. Chilean Cash Management System
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`Prior to the Petition Date, the Debtors WOM, WOM Mobile, Conect, and Multikom
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`(collectively, the “Chilean Debtors”) maintained an integrated cash management system in Chile
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`(the “Chilean Cash Management System”).
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`As set forth in the First Day Declaration, the Debtors’ primary sources of income
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`are: (i) monthly payments from customers for providing wireless mobile network service and for
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`the sale of mobile equipment devices and other equipment necessary to connect to broadband
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`networks (the “Mobile Business”); and (ii) monthly payments from customers for providing
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`“Fiber to the Home” (“FTTH Business”) broadband. The Debtors also receive payments from
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`the sale of certain network towers to Phoenix Tower International (“PTI”), a global tower
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`infrastructure operator (the “PTI Network Tower Sale”), and, occasionally, funds from Huawei
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`(Chile) S.A. in connection with financing for the construction of infrastructure and towers (the
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`“Huawei Financing”). Additionally, in connection with the Debtors’ concessions granted by the
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`Ministry of Transportation and Telecommunications
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`(Ministerio de Transportes y
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`Telecomunicaciones de Chile), the Debtors have historically received, and will continue to receive,
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`subsidies from the Chilean government to perform under WOM’s fiber optic network (“FON”)
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`projects (“Governmental Subsidies”).
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`The Debtors receive payments in connection with the Mobile Business and FTTH
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`Business from customers: (i) through certain third-party servicers, including banks and local fin-
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`techs (the “Servicing Channels”), which are engaged by the Debtors to receive payments directly
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`from customers, in person or in those Servicing Channels’ physical stores; (ii) through cash
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`payments made directly at Servicing Channels’ physical stores in Chile; (iii) through payments
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`made directly at the Debtors’ physical stores in Chile for mobile equipment devices; or (iv) through
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`automatic electronic payments or bank transfers.
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`The Debtors receive payments primarily into five main Bank Accounts (as defined
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`below) held by WOM (BCI -7850; BCI -2182; Santander -0940; Banco Estado -6716; Banco de
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`Chile -2200). The Debtors also receive payments from the PTI Network Tower Sale and the
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`Huawei Financing in a Bank Account held by WOM S.A. (BCI -2636) in U.S. Dollars and a Bank
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`Account held by Conect (BCI -1263) in Chilean Pesos, respectively, from which funds are then
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`used to fund payables.
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`Payments received in multiple Bank Accounts (as defined below) on account of the
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`Mobile Business must be directed to one of WOM’s Bank Accounts at Banco de Crédito e
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`Inversiones S.A. (“BCI”) (BCI-7850) up to one business day after receipt, pursuant to the EF
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`Securitization Documents (as further explained and defined below) (such Bank Account, the “EF
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`Restricted Account”). From that account, the Debtors may direct funds to other Bank Accounts.
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`Any cash remaining in certain Bank Accounts (BCI -5042; BCI -1522; BCI -1263),
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`at the close of each business day is automatically swept into a pooling Bank Account held by
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`WOM at Banco de Crédito e Inversiones S.A. (“BCI”) (BCI -2182) (the “Concentration
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`Account”). Cash in certain Bank Accounts which is not subject to the automatic cash pooling is
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`transferred manually by the Debtors’ personnel to the Concentration Account. From the
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`Concentration Account, the Debtors transfer cash to WOM’s main disbursement account (BCI -
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`5042) (the “Main Disbursement Account”).
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`The Debtors use funds in WOM’s Main Disbursement Account for payment of,
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`among others: (i) third parties, including, but not limited to, vendors, certain factoring providers4
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`to which certain of the Debtors’ vendors sell their receivables, lessors, and tax authorities (the
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`“Third Parties”); (ii) the Debtors’ executives’ wages; (iii) the IDB Facility (as defined below);
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`and (iv) the EF Securitization Facility (as defined below). As noted above, all remaining funds left
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`in the Main Disbursement Account are swept automatically into the Concentration Account at the
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`end of each day.
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`In addition to the Main Disbursement Account, the Debtors use Bank Accounts in
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`U.S. Dollars (held at JPMorgan Chase Bank, N.A. (“JPMorgan Chase”)) to pay Third Parties
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`and, through Intercompany Transfers between Debtors, ultimately pay interest on the 2024 Notes
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`and 2028 Notes. Finally, WOM’s Bank Account (BCI -1522) is used as another Disbursement
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`4 As further described in the Debtors’ Motion for Entry of Interim and Final Orders (I) Authorizing the Debtors to (a) Pay
`Foreign Vendor Claims, Interconnection Claims, Shipper Claims, and Refund Claims and (b) Continue Other Customer
`Programs; and (II) Granting Related Relief filed contemporaneously herewith, under certain factoring arrangements, the
`Debtors pay amounts owed to certain vendors directly to the factoring providers.
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`Account (as defined below), from which the Chilean electricity and water providers automatically
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`charge the Debtors for invoices related to the use of their network towers and stores.
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`The Chilean Debtors’ consolidated treasury department maintains daily oversight
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`of the Chilean Cash Management System and implements cash management controls for entering,
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`processing, and releasing funds on a consolidated basis.
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`B. NC Telecom II and Kenbourne Bank Accounts
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`Prior to the Petition Date, the Debtors NC Telecom II and Kenbourne each
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`maintains and controls its own Bank Accounts (together with the Chilean Cash Management
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`System, the “Cash Management System”). Kenbourne holds three Bank Accounts at Citibank
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`Europe Plc (Luxembourg branch) – two Collection Accounts (defined below) and one
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`Disbursement Account. NC Telecom II’s holds four Disbursement Accounts, three at Bank of
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`Cyprus Public Company Ltd. and one at JPMorgan Chase.
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`* * *
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`The Debtors maintain (and will continue to maintain) current and accurate records
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`of all transactions processed through the Cash Management System. This Cash Management
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`System facilitates the Debtors’ cash forecasting, monitoring of collections, approval of
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`disbursement of funds, preservation of capital, and management of liquidity requirements. It also
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`reduces administrative expenses by facilitating the movement of funds and allowing for timely and
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`accurate balance information. Among other benefits, the Cash Management System permits the
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`Debtors to accurately monitor cash availability at all times. A diagram of the Debtors’ flow of
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`funds is attached hereto as Exhibit C.
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`The Cash Management System is critical to the operation of the Debtors’ business
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`in the ordinary course, and any disruption of the Cash Management System would be materially
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`detrimental and disruptive to the Debtors’ business.
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`A.
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`The Bank Accounts
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`The Cash Management System is comprised of 45 bank accounts held by the
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`Debtors (each, a “Bank Account” and collectively, the “Cash Management Bank Accounts” or
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`“Bank Accounts”), at 17 different institutions (each, a “Cash Management Bank,” and
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`collectively, the “Cash Management Banks” or “Banks”). The Debtors have Bank Accounts in
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`five countries: (i) 27 Bank Accounts in Chile, (ii) 11 Bank Accounts in the U.S., (iii) three Bank
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`Accounts in Cyprus, (iv) three Bank Accounts in Luxembourg; and (v) one Bank Account in
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`China. A full list of the Debtors’ Bank Accounts is identified on Exhibit D attached hereto.
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`The Chilean Debtors’ main operating accounts are held at BCI, Banco Santander-
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`Chile, Banco Estado, Banco de Chile, and JPMorgan Chase. Kenbourne’s main Bank Account is
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`held at Citibank Europe Plc (Luxembourg branch), while NC Telecom II’s main Bank Account is
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`held at Bank of Cyprus. The Debtors maintain their Bank Accounts primarily in Chilean Pesos or
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`U.S. Dollars. In addition, Debtor WOM has approximately $62,0005 in investments in Banco de
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`Chile, as of March 29, 2024.
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`The Bank Accounts generally fall into one of two broad categories,6 each of which
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`is described in the following table:
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`5 All amounts contained herein are listed in U.S. dollars (“U.S. Dollars”) unless otherwise noted. Certain amounts have been
`converted from Chilean pesos to U.S. dollars using the currency exchange rate of 980 Chilean pesos (“Chilean Pesos”) per
`U.S. dollar, which is the approximate average of the currency exchange rates set forth by the Chilean Central Bank over the
`past 15 days.
`Prior to the Petition Date, Richards, Layton & Finger, P.A. established an interest-bearing escrow account for each of Debtor
`Kenbourne, Conect, and Multikom at M&T Bank Corporation (each, an “Escrow Account”), as identified on Exhibit D
`attached hereto. Each Escrow Account is held in the name of the applicable Debtor and all funds in such account remain funds
`of the applicable Debtor.
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`Type of Account
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`Collection
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`Disbursement
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`Description of Account
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`The Debtors maintain ten collection Bank Accounts (each, a “Collection
`Account” and, collectively, the “Collection Accounts”), which receive
`inflows via cash, bank and wire transfers, credit and debit card payments,
`or automated clearinghouse (“ACH”) transfers.
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`Certain Chilean Debtors’ Collection Account balances automatically sweep
`into the Concentration Account. Funds in certain Chilean Debtors’
`Collection Accounts are maintained in these accounts or manually
`transferred to the Concentration Account on an as-needed basis. Funds
`maintained at Kenbourne’s Collection Account are either maintained in this
`account or manually transferred to Disbursement Accounts on an as-needed
`basis.
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`Certain Chilean Debtors’ Collection Accounts also serve as Disbursement
`Accounts (as defined herein), including to pay payroll expenses.
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`One of WOM’s Collection Accounts (BCI -7850) is subject to a deposit
`account control agreement (a “DACA”) between WOM, BCI, as the Bank
`at which such Collection Account is maintained, and EF (as defined below)
`under the EF Securitization Facility (as defined below). As described more
`fully below, pursuant to the EF Securitization Documents (as defined
`below), the Debtors move funds in the EF Restricted Account (as defined
`below) to certain other Bank Accounts. The EF Securitization Documents
`provide for cash dominion and control by EF over the EF Restricted
`Account upon the occurrence and continuance of certain specified events
`of default. Moreover, as indicated in Exhibit D, four (4) Collection
`Accounts are pledged for the benefit of EF under the EF Securitization
`Facility (the “EF Pledged Accounts”).
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`Certain of the Debtors’ Collection Accounts are also designed to receive
`the IDB Receivables, which the Debtors transfer to the Disbursement
`Accounts and then remit to IDB Invest (as defined below) on account of
`the IDB Facility (each as defined below). The IDB Facility is described
`more fully below.
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`The Debtors maintain 37 disbursement Bank Accounts funded from the
`the “Disbursement
`Debtors’ Collection Accounts
`(collectively,
`Accounts”). Through the Disbursement Accounts, transfers are primarily
`made with respect to the operating costs and expense of the Debtors’
`business, the IDB Facility, the EF Securitization Facility, and payroll and
`other expenses.
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`Certain Chilean Debtors’ Disbursement Accounts also serve as Collection
`Accounts.
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`Certain of the Debtors’ Collection Accounts and Disbursement Accounts have little
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`or no balance and have been inactive for several months.
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`Periodically, the Cash Management Banks charge the Debtors service charges,
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`maintenance fees, processing fees, transaction fees, foreign currency fees, surety bonds fees, and
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`other fees in connection with the maintenance of the Cash Management System (“Bank Fees”).
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`The Debtors pay the Cash Management Banks an aggregate of approximately $610,000 on account
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`of the Bank Fees per month, which are generally due and paid on a weekly or monthly basis
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`depending on the type of service the Cash Management Bank performs. The Debtors estimate
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`that, as of the Petition Date, the accrued, unpaid, and undisputed prepetition Bank Fees (the “Bank
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`Fee Claims” and together with the IDB Transfers, EF Securitization Facility Claims,
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`Intercompany Claims, the “Cash Management Claims”) total $610,000 in the aggregate, with
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`$610,000 coming due in the Interim Period. The Debtors seek authority to continue paying Bank
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`Fees, including the prepetition Bank Fee Claims in the ordinary course on a postpetition basis,
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`consistent with historical practices.
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`The Debtors’ main Bank Accounts, although not within the UST Authorized
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`Depository List, are accounts held at highly-rated, global financial institutions that are widely
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`recognized as well-capitalized and financially stable. Further, all of the Debtors’ foreign Bank
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`Accounts are held in Chile, Cyprus, Luxembourg, or China at financially stable institutions. The
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`Debtors’ 27 Bank Accounts in Chile are subject to the direct oversight of the Chilean Financial
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`Market Commission, an agency under the Ministry of Finance that regulates the financial sector
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`in Chile. Moreover, 19 out of 45 Bank Accounts are with banks on the UST Authorized Depository
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`List or held in affiliate of such financial institutions. 17 out of 45 Bank Accounts are insured by
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`either the Federal Deposit Insurance Corporation (“FDIC”) (up to an applicable limit per Debtor
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`per institution), or its Cypriot, Irish,7 or Chinese equivalent, the Deposit Guarantee and Resolution
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`of Credit and Other Institutions Scheme, the Deposit Guarantee Scheme, and the insurance
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`required under the Chinese Deposit Insurance Regulation,8 respectively.
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`B.
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`Intercompany Transfers
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`From time to time, a Debtor will transfer funds through the Cash Management
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`System to another Debtor (such transfers among Debtors, the “Intercompany Transfers”). In
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`particular, in the ordinary course of business, certain of the Chilean Debtors periodically transfer
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`funds to Debtors NC Telecom II and Kenbourne on account of servicing interest on the 2024 Notes
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`and 2028 Notes. Debtor WOM also in the ordinary course pays the shared expenses of certain
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`other Debtor affiliates, including NC Telecom II and Kenbourne. Moreover, on a regular basis, in
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`the ordinary course of business, Chilean Debtors transfer funds to one another for cash
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`management purposes.
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`These Intercompany Transfers are critical to the efficient operation of the Debtors’
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`business particularly because the Intercompany Transfers are used to ensure adequate funding for
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`each Debtors’ obligations. Discontinuing the Intercompany Transfers would unnecessarily disrupt
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`the Cash Management System and the Debtors’ operations to the detriment of the Debtors, their
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`creditors, and other stakeholders. Because the Debtors engaged in Intercompany Transfers on a
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`regular basis prepetition, and such transactions are common for similar enterprises, the Debtors
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`believe they can continue the Intercompany Transfers in the ordinary course, under section
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`7 Debtor Kenbourne holds Bank Accounts in the Luxembourg branch of the Irish bank of Citibank, Citibank Europe Plc;
`therefore, the Irish deposit protection regime applies.
`8 Article II of the Chinese Deposit Insurance Regulation provides that “Commercial banks, rural cooperative banks, rural credit
`cooperatives, and other deposit-taking banking financial institutions formed within the territory of the People’s Republic of
`China . . . shall buy deposit insurance under this Regulation.” Accordingly, the Debtors believe the deposit held in the China
`Development Bank should be insured in China.
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`363(c)(1) of the Bankruptcy Code. Nonetheless, out of an abundance of caution, the Debtors seek
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`express authority to continue engaging in the Intercompany Transfers. As noted, and consistent
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`with their prepetition practice, the Debtors will maintain records of all transfers and ascertain,
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`trace, and account for all Intercompany Transfers during these Chapter 11 Cases. Additionally,
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`the Debtors request that any Intercompany Claims against a Debtor by another Debtor be granted
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`administrative expense priority status under section 503(b) of the Bankruptcy Code, which will
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`facilitate the orderly and efficient operation of the Debtors’ enterprise.
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`C.
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`IDB Transfers
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`Debtor WOM acts as collection agent for certain receivables the Debtors sold to the
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`Inter-American Investment Corporation (“IDB Invest”), an affiliate of Inter-American
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`Development Bank. Pursuant to a Receivables Transfer Agreement, dated as of December 28,
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`2021 (as amended, restated, supplemented or modified through the Petition Date, the “IDB
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`Receivables Agreement” and, together with each of the Purchase Documents (each as defined
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`therein), the “IDB Receivables Documents”), Debtor WOM agreed to sell, from time to time, to
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`IDB Invest receivables arising from the sale of (i) mobile equipment devices and other equipment
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`necessary to connect to broadband networks and (ii) cloud, data and other digital services for
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`personal and corporate consumers (such receivables, the “IDB Receivables” and, collectively, the
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`“IDB Facility”). The IDB Facility is currently closed (i.e., the Debtors are no longer selling
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`receivables to IDB Invest pursuant to the IDB Facility), but, as described below, the Debtors
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`continue to act as the collection agent for the receivables that have been previously sold.
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`Pursuant to the IDB Receivables Documents, Debtor WOM sold the IDB
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`Receivables to IDB Invest and, as collection agent in respect thereof, periodically remits the IDB
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`Receivables to IDB Invest (the “IDB Transfers”). Accordingly, certain of Debtor WOM’s
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`receivables in its Bank Accounts are, in fact, property of IDB Invest, and Debtor WOM is only
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`acting as a pass-through entity with respect to the IDB Receivables. All right, title and interest in,
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`to and under each sold IDB Receivables was assigned and transferred to IDB Invest pursuant to
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`the IDB Receivables Documents. In addition, pursuant to the IDB Receivables Documents, Debtor
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`WOM has an obligation in favor of IDB Invest to pay or procure the payment of each payment
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`amount. Debtor WOM’s obligation to remit payments to IDB Invest may only be discharged by
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`complete performance and survives the termination or default under the IDB Receivables
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`Documents.
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`Although Debtor WOM has ceased to initiate new sales of IDB Receivables to IDB
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`Invest, as of the Petition Date, the Debtors estimate that amounts outstanding to be transferred by
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`the Debtors on account of the IDB Transfers total approximately $17.5 million in the aggregate.
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`Pursuant to this Motion, the Debtors seek authority to continue to perform their obligations under
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`the IDB Receivables Documents and, to continue to make IDB Transfers in the ordinary course of
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`business.
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`D.
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`EF Securitization Facility
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`On January 18, 2024, WOM, as borrower, and EF Securitizadora S.A. (“EF”), as
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`trustee, entered into a Framework Agreement (Contrato Marco para la Cesión de Créditos y
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`Derechos sobre Flujos de Pago) (as amended, restated, supplemented or modified through the
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`Petition Date, the “EF Framework Agreement”). In addition, EF, as issuer, and BCI, as
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`representative of certain bondholders are parties to an Issuance Agreement (Contrato de Emisión
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`Desmaterializada de Títulos de Deuda de Securitización con Formación de Patrimonio Separado
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`por Línea), dated as of January 18, 2024 (as amended, restated, supplemented or modified through
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`the Petition Date, “EF Securitization Agreement” and, together with the EF Framework
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`Case 24-10628-KBO Doc 7 Filed 04/01/24 Page 14 of 59
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`Agreement and related transaction documents, the “EF Securitization Documents”). The EF
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`Framework Agreement provided approximately $51 million, of which the Company received
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`(a) $26 million by offsetting a previous bridge loan, including repayment costs, (b) $15 million in
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`Junior Bonds (as defined below) and (c) $10 million in cash (the “EF Securitization Facility”).
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`Under the EF Securitization Documents, the Debtors have the obligation to sell and assign certain
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`receivables to EF, until the Debtor’s obligations under the transaction documents are met (the “EF
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`Transfers”). Moreover, the obligations owed to EF are secured by first priority liens on, and
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`security interests in, certain bank accounts and contracts (collectively, the “EF Liens”).
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`In particular, the EF Liens granted by Debtor WOM under the EF Securitization
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`Documents to or for the benefit of EF as security for the EF Secured Obligations (as defined in the
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`EF Securitization Documents) encumber certain agreements with banks and other servicing
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`channels who receive the payments of certain accounts receivable (the “EF Receivables”) and the
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`EF Pledged Accounts in which payment for such EF Receivables is received.
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`
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`Parallel to this transaction, EF issued approximately (i) $39 million in senior
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`secured bonds (the “Senior Bonds”) and (ii) $15 million in subordinated unsecured bonds (the
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`“Junior Bonds”). The Senior Bonds were purchased by Moneda S.A. Administradora General de
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`Fondos by assigning and offsetting a $26 million bridge loan it issued to the Company on
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`November 29, 2023 and the balance in cash. Such obligation shall be satisfied through the funds
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`from the EF Receivables. The Junior Bonds were acquired by the Company and will be paid off
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`using the excess EF Receivables only after the Senior Bonds are paid in full. As of the Petition
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`Date, the Debtors estimate that accrued, unpaid, and undisputed prepetition amounts outstanding
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`on account of the EF Transfers (the “EF Securitization Facility Claims”) total approximately
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`$39 million in the aggregate. Accordingly, the Debtors request authority to continue performing
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`Case 24-10628-KBO Doc 7 Filed 04/01/24 Page 15 of 59
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`their obligations under the EF Securitization Documents and to continue to make EF Transfers in
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`the ordinary course of business.9
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`E.
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`Business Forms
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`The Debtors use various business forms, such as invoices, letterhead, and other
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`business and marketing materials in the ordinary course of their business (the “Business Forms”).
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`Because the Business Forms were used prepetition, they do not reference the Debtors’ current
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`status as debtors-in-possession. Requiring the Debtors to change existing Business Forms would
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`unnecessarily distract the Debtors from continuing the Company’s existing operations so as to
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`maximize value of its assets and impose needless expenses on the estates. Thus, the Debtors
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`request that that the Court authorize them to use their existing Business Forms throughout these
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`Chapter 11 Cases; provided, that, as soon as reasonably practicable, the Debtors will cause any
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`electronically generated Business Forms to reflect the “Debtors-in-Possession” designation and
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`the corresponding chapter 11 case number.
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`III. Expense Programs
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`In the ordinary course of business, the Debtors maintain company-paid credit cards
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`for business-related expenses (the “Corporate Credit Cards”) and routinely reimburse the
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`Debtors’ employees for certain expenses incurred within the scope of their employment, including
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`expenses for travel, lodging, ground transportation, meals, business entertainment, and other
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`miscellaneous business expenses (collectively, the “Reimbursable Expenses,” and together with
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`the Corporate Credit Cards, the “Expense Programs”). There are currently 43 active Corporate
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`Credit Cards issued by Debtor WOM and held by employees that are used to pay for the
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`Reimbursable Expenses. The Corporate Credit Cards are issued to the Employees in each
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`9 Repayment of the EF Securitization Facility is likely and contemplated under the DIP Facility.
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`Employee’s own name, but monthly invoices are paid directly by the Debtors on a monthly basis
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`from the applicable Debtors Disbursement Accounts upon verification and approval of the charges
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`– and the Employees do not have any liability for such debts. Most charges, credits, and payments
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`for Reimbursable Expenses are administered directly by the Debtors and paid on a periodic basis.
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`Payments of Reimbursable Expenses are paid from the applicable Debtors Disbursement
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`Accounts. The Expense Programs are described, and relief is requested with respect thereto, in
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`the Debtors’ Motion for Entry of Interim and Final Orders (I) Authorizing the Debtors to (A) Pay
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`Prepeti