The bankruptcy of Mercon, a Nicaraguan coffee trading company, has sent shockwaves through the financial industry. The company, which owes $363.34 million to various local and international financial institutions, has filed for chapter 11 bankruptcy in New York. This allows companies to request protection against the inability to meet their obligations.
At least four local banks, including Banco Lafise, the BAC, the BDF, and the state-owned Banco de Fomento a la Produccion, are among the creditors needing to recover their loans from Mercon. The most affected by Mercon’s bankruptcy filing is the Rabobank Facility bank, which is owed $202.55 million. This loan is part of a $500 million revolving credit line that the group announced in June 2021, and that would be led by Rabobank, which has Dutch capital.
Local banks, including Lafise Bancentro, BAC Nicaragua, and the Finance Bank (BDF), are also owed significant amounts by Mercon. According to an analyst, while these debts are manageable, they could impact the banks’ profits.
Other international creditors, including Starbucks, the Financing Company for Developing Countries NV, and Banco Internacional de Costa Rica, SA, among others, are also exposed to Mercon’s bankruptcy filing. In total, there are a dozen international creditors that are affected.
The bankruptcy of Mercon has raised concerns about the stability of the financial industry in Nicaragua. While the local banks are likely to be able to absorb the losses, it remains to be seen how this will impact their profits and activity throughout the country. The situation will require careful negotiation and collaboration between all parties involved.