‘No hay base de activos para respaldar las deudas’, Justo & Bueno | Empresas | Negocios

Michel Olmi, founder of Fair & Goodacknowledges that the chain “does not have a significant base of fixed assets to support claims in a liquidation scenario.”

He responded to questions formulated in writing by Portafolio about the reasons that led the chain to liquidation and about the option of saving itself.

Why did the company get into this situation?

Starting 2020, when Justo & Bueno had been in operation for four years, it had 1,320 stores in the country, above the 337 reached by D1 in this period. During this period, we achieved sales of more than US$874 million per year and we were the fastest growing discount chain in the world. Our projections indicated reaching the break-even point in 2020, two years earlier than recorded by D1. We were a high-growth startup, and we required one last injection of resources to cover working capital before starting to accumulate cash.

(Another salvage option arises for Justo & Bueno).

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 94% in sales.

What happened in January?

In January of this year, with resources from new investors and the support of a group of suppliers, we began a reactivation plan in order to increase sales so that they would begin to cover expenses as of April. An initial capital injection estimated at US$25 million was required to cover the cash deficit of the first months of the year and we perceived it as feasible. This is how with only 30% of that capital we were able to restock the stores, increase sales and regain the trust of our allies.

(Fair & Good: they decree their immediate liquidation process).

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.

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.

How much are the credits?

From January to date they total approximately US$35 million. The reorganizable liability amounts to US$281 million.

Already in liquidation, what will the company respond with?

The value of Justo & Bueno lies in the positioning that we have built over the years and its contribution to the quality of life of Colombian households and to food security through the network of stores in more than 300 municipalities in the country.

(Justo & Bueno will begin this Friday the joint with the liquidator).

The business model is based on an operation scheme without its own assets, combining leases and leases to facilitate growth in the initial phase. Once the accumulation phase is entered after reaching the balance point, the model allows moving to the construction of a portfolio of fixed assets that consolidate the company’s equity situation. Justo & Bueno did not get close to this second stage and therefore does not have a significant base of fixed assets to support claims in a liquidation scenario.

The greatest value of the chain is in its execution capacity. That is why the best scenario for all stakeholders will be to keep the chain running.

Who is now the owner of Justo & Bueno?

With the decision of the Supersociedades, it belongs to the creditors. But understanding that you are asking about the role of JF Capital, as they publicly mentioned, the signing of the sale agreement of HD Colombia SA, parent company of Mercadería SAS, to JF Capital International Ltd. took place on March 29. We welcome the judge’s opportunity to welcome the company to article 6 of Law 560 of reorganization, since this allows a new opportunity for rescue in the next 30 days.

What do you say to those who feel cheated because after many announcements the reality is liquidation?

We have not deceived anyone. We work day and night for a possible rescue option for Justo & Bueno. What I say is little because those affected have been many. From the beginning we acted with the greatest responsibility, trying to avoid the worst scenario and knowing that the only way out was to keep the operation active.

How is the operation in Chile and Panama? Can these assets cover the debts?

The negotiation -with JF Capital International- only included what was related to SAS Merchandise in Colombia. The objective was to rescue the company in Colombia to continue expanding it in the country, in Argentina, Ecuador and Mexico.

And how is Tostao’?

The negotiation – with JF Capital International – only contemplated what was related to SAS Merchandise