What’s the future of Mexican retailer +Kota after filing insolvency proceedings?
It’s not yet clear if the chain will finally go bankrupt and close its 200 shops nationwide or restructure its business.
+Kota, the second biggest pet retailer in Mexico after Petco, filed for insolvency proceedings on March 23 and was accepted for processing on April 6, according to the records of the Consejo de la Judicatura Federal (Federal Judiciary Council) quoted by local media.
Under Mexican law, insolvency proceedings may be requested by a company or its creditors when it has fallen into a generalized default of payment.
Lawyer José Antonio Sagredo from GLZ Abogados, who represents creditors in the case, noted to GlobalPETS that this “does not mean that the company is destined to go bankrupt, but quite the contrary.”
“The purpose of this legislation is to reach a new agreement with their creditors regarding a new payment scheme and a discount on these to allow the company to continue operating, and not go bankrupt,” he explained.
The leading pet store chain in the Mexican market is now in a “pre-bankruptcy” stage as the corresponding ruling has not yet been issued as such.
“Currently, the specialist appointed by the Federal Institute of Commercial Insolvency Specialists (IFECOM) is carrying out the respective verification visits in order to determine whether +Kota is indeed in a possible state of commercial insolvency.”
Will +Kota close its stores?
The results of these verification visits will be made available to the Court, which will decide whether or not the bankruptcy proceeding will be allowed.
“Although this procedure is in its early stages, we can assume that as it is an application and not a lawsuit, the company is indeed in a general state of default,” added Jose Antonio Sagredo.
But the company desired “to seek restructuring and continue its operations” and avoid a total closure of its stores.
Although there is no official information about the number of +Kota stores, it is believed that the retailer had approximately 300 nationwide in 2014, while currently this number has been reduced to around 200 stores.