Chilean judge declares Nova Austral bankrupt

A judge in Chile has declared the struggling salmon company Nova Austral to be bankrupt. The move is likely to be temporary, however, as Nova Austral is almost certain to appeal the ruling. The resolution, made earlier this week, ordered the opening of a bankruptcy liquidation process, requesting the Superintendence of Insolvency and Re-entrepreneurship to nominate a liquidator The resolution also set out the background of the three main creditors. The chief judge of Porvenir in Pablo Aceituno, declared Nova Austral to be bankrupt following complaints from two creditors who claimed unequal treatment. Their claims were accepted by the judge. The creditors concerned are thought to be unhappy with the terms of the reconstruction deal reached in January. Recent financial reports show that Nova Austral’s losses almost trebled last year despite much higher revenues. Its accounts for 2023 show pre-tax losses of just over $US 144 million (£128m) against $49.9 million (£44m) in 2022. Nova Austral, which employs more than 3,000 people, says in its annual report that this situation is a fundamental consequence of the substantial drop in the company's production levels, due to the revocation of three aquaculture concessions carried out by the environmental authority (SMA) starting in 2022.  These were reversed in the first instance by the environmental court during the month of January 2024. The company also cites the financial costs associated with the issuance of the bond in Norway. Despite this Nova Austral remains reasonably positive. It says in its 2023 annual report that its sales come from a highly diversified client portfolio, where clients are economically and geographically dispersed in countries with low sovereign risk rates (United States, European Union, mainly). In addition, the company said, credit operations are performed with clients that have a stable commercial relationship with the company and a good payment history, together with a conservative credit policy. The report adds: “Therefore, the company believes its commercial operations do not expose it to a high risk. Also the history of the company shows no significant bad debts associated with exports or domestic sales. “ “The company has a very conservative customer credit policy, whereby most of sales are made with advances against documents, together with a risk hedge via a credit insurance that includes a great portion of the portfolio, and hence hedging the risk of client insolvency.”