Justo & Bueno: cómo un gigante de los descuentos llegó a las puertas de la liquidación

The low-cost store Justo & Bueno went into liquidation after being unable to pay its creditors the huge debt it owed.

On May 10, the representative of SAS Merchandise (Fair & Good), Nicolás Polanía, requested the Superintendency of Companies to begin the process of judicial liquidation of the company, after not receiving the money that was going to deliver the Chinese fund JF Capital, which promised to save the company.

“I politely inform the Firm that during office hours on May 10, 2022, and until the time this writing was filed, no resources were entered into the SAS Merchandise accounts nor was there any news that any third party had made payments of administration expenses in charge of this company”, can be read in the statement.

Although Justo & Bueno closed its doors for a few days, on Saturday, May 14, it invited “to the workers of Mercadería SAS in judicial liquidation to attend their workplaces again so that as of Sunday, May 15, the stores can open.”

According to the company, it hopes to find a solution to the financial problems accumulated in recent years, since it owes its employees 42,000 million pesos; of leases and pending obligations, the debt amounts to 35,000 million; in leasing contracts the figure is 19.7 billion.

Merchandise SAS also owes 19,700 million pesos in incomeand the tax obligations that have not been paid amount to nearly 17,100 million pesos; while in other expenses, arrears exceed 20,600 million.

Roberto Luis Hernandez Buelvasjournalist and economist from the Universidad del Norte, assured that one of the main problems that Justo & Bueno could have had to do with suppliers. “In this type of business, product rotation is key, so suppliers are important: if you don’t have products, the consumer assumes that you can’t find products,” he explained.

His point of view coincides with what was said by Michel Olmi, owner of Justo & Bueno, who spoke with Portafolio about the reasons that led the chain to liquidation. According to him, the pandemic affected the growth that the company had in 2020: “In four years of operation, it had 1,320 stores in the country, above the 337 reached by D1 in this period” and this led to problems with suppliers.

“We were a high-growth startup and we required one last injection of resources to cover working capital before starting to accumulate cash. To this were added the movement restrictions during the first year of the pandemic, the closure of stores and the social outbreak of 2021, which limited investment access and produced a deterioration in our liquidity situation that affected the ability to pay and the trust of our suppliers. This translated into a shortage and a drop of more than 9 4% in sales”.

In addition, in January 2022 they tried to apply a capital injection of “US$25 million to cover the cash deficit of the first months of the year”, but the investors “they had difficulties getting the funds into the country on time”, which affected the liquidity of the company, and the debts accumulated.

The activation between January and March allowed us to attract new investors to capitalize on the remaining amount, several of whom had difficulties getting the funds into the country on time. Those delays caused us problems keeping up with administrative expenses and we accumulated current debts that to date total US$35 million”Olmi assured.

Finally, the default of the Chinese conglomerate F Capital International, which had presented an offer in March to settle debts and assume expenses, led to the liquidation of Justo & Bueno.

The firm JF Capital International presented an offer in March, which not only covered this current balance, but also assumed future operating expenses, the estimated cost of reorganizing the debts in Law 1116 and the stabilization of the company for a new growth stage. Once the sale agreement was reached, JF Capital undertook to pay the current expenses accumulated until April, before May 10. However, this unfortunately did not happen.

For now, the company belongs to the creditors, although it is waiting for that, with article 6 of Law 560 of reorganization, a new salvage opportunity may be given in the next 30 days.

The company was one of the leading brands of big discount who, together with D1 and Ara, became popular in the country by giving economic options to Colombians of good quality products. Its creator was Michel Olmi, a Chilean who came to Colombia to found D1 but who sold the brand to the Santo Domingo Group, which promoted the supermarket that already competes with big brands.

Then he started ‘Tostao’, one of the most popular cheap coffee shops in Colombia, taking advantage of the fact that, despite his coffee-growing vocation, he did not have similar shops.

After the success of the coffee shops, Olmi decided to go back to his old idea and create Justo & Bueno with the same low-cost system as D1 and Ara. But although the model was successful, the company began to have problems.

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