One of the world's largest coffee traders filed for bankruptcy with debts of more than $300 million
Mercon Coffee Group, one of the world's largest coffee traders, filed for bankruptcy protection under Chapter 11 in New York after experiencing a "challenging operating environment" in the coffee trade, Reuters reported.
In a letter to customers, Mercon, which has operations in all major production regions, including Brazil, Vietnam and Central America, said that a number of problems in recent years, such as multiple logistics disruptions during the outbreak, frost and drought in Brazil, price fluctuations and rising currency interest rates, had hurt the company's financial position. And the lender has chosen not to extend the credit agreement, resulting in extremely tight working capital conditions.
According to court documents from the bankruptcy Court for the Southern District of New York, the total debt of Mercon and its subsidiaries in several countries is $363 million. The biggest creditors include several banks in the countries where Mercon operates, as well as trading companies in Brazil, Central America and the United States.
In fact, in 2019, Mercon announced a $450 million sustainable development initiative and a groundbreaking revolving credit facility, and launched an internal sustainable development program called LIFT in Nicaragua. The program features training, technical assistance, rural business management, agricultural practices, Rainforest Alliance standards compliance, and access to capital and risk management tools for coffee farmers. As part of the loan, Mercon will expand its LIFT program to other countries of origin that already have operations, including Guatemala, Honduras, Brazil and Vietnam. The mechanism is a credit facility led by the Dutch Bank of Cooperation (Rabobank) and will use sustainable development initiatives linked to performance indicators for sustainable development.
However, due to the various problems and difficulties encountered by the company in recent years, the final result is to stop the plan and apply for bankruptcy protection. Currently, the restructuring under Chapter 11 bankruptcy allows Mercon to continue to operate to repay its debts.
Currently, only Nicaragua, the country's main coffee buyer and exporter, CISA Exportadora, has ceased operations and went bankrupt. Therefore, the Government of Nicaragua indicated that it was cooperating with coffee industry and foreign coffee traders to ensure the sale and export of Nicaraguan coffee.
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