Our team advised Avenida Colombia in designing an in and out of court recovery strategy under the reorganization process of Inverfam S.A., parent company of Acierto Inmobiliario S.A. Acierto is a traditional Colombian Company, with 20 years of experience in the real estate sector, primarily focused on development of housing projects across different cities in the country.
Back in 2017, Avenida joined efforts with Acierto for the construction of social housing projects, where Avenida became one of their most relevant financial allies. However, due to Covid-19, and the unexpected increase of construction materials, Inverfam started an emergency negotiation request for a reorganization agreement in August 2023. In parallel, the progress of real estate projects was significantly impacted, and fulfilling the schedules of such housing projects became impossible.
At that critical juncture, Avenida and certain Acierto’s affiliated entities explored alternatives not only to recover Avenida’s investment (around USD 50M equivalent to 14% of the reorganization voting rights), but also to continue the development of the real estate projects and fulfill housing delivery to more than 6.000 families affected by Acierto’s financial crisis. As a result, Avenida received 100% of the rights, and responsibility, to continue developing 7 housing projects.
This entailed negotiations with various stakeholders, including developer partners to ensure the continuance of project development, approximately 15 investors with rights over trusts through which Acierto carried out the projects, and fiduciary representatives overseeing the trusts for each real estate project in progress. In addition, this negotiation was approved under Inverfam’s reorganization agreement, without any questioning from the Bankruptcy Court or the creditors.
Nowadays, Avenida Colombia is a key player in the group developing social housing real estate projects. Their involvement has permitted normalizing relationships with suppliers, financial institutions, and recovered confidence in the projects from those who acquired the residential units.
This was a challenging project given its social impact: after the execution of the agreement with Acierto, Avenida has the rights and responsibilities over 7 real estate projects, ensuring the construction of residential units for approximately 6000 Colombian families; timing: if the agreement between Acierto and Avenida wasn’t executed on time, the future of housing projects and their purchasers would have been uncertain; reorganization limitations: given Inverfam’s ongoing reorganization procedure, structuring the deal required exploring alternatives that did not violate any restructuring law restrictions. The goal was for Avenida Colombia to recover its investment while continuing with the development of the housing projects; and stakeholders’ negotiation: the agreement required simultaneous negotiations with multiple stakeholders, looking for Avenida to become a new partner in the project’s development. Stakeholders included development partners, 15 investors with rights over trusts, fiduciary representatives overseeing the trusts for real estate development, financial institutions, and others.
