Espirito Santo Units’ Creditor Protection Requests Are Accepted

Luxembourg’s commercial court accepted requests from Grupo Espirito Santo’s Rioforte Investments SA and Espirito Santo Financial Group SA to seek protection from creditors as the companies struggle to make certain debt repayments.

Anick Wolff was appointed as judge to produce a report on the commercial situation of the companies, according to a statement posted on Luxembourg’s justice website.

The court on July 22 said it accepted a request from Espirito Santo International SA to seek protection from creditors. Espirito Santo Financial Group SA, the owner of a 20.1 percent stake in Portuguese lender Banco Espirito Santo SA, on July 24 said it was seeking protection from creditors under Luxembourg law as it’s unable to meet certain debt obligations.

Banco Espirito Santo’s stock has slumped 39 percent this month as the three parent companies linked to the Espirito Santo family requested protection from creditors. Portuguese central bank Governor Carlos Costa has tried to reassure depositors and investors that Banco Espirito Santo can withstand any losses that may result from Grupo Espirito Santo’s difficulties after some of the group’s units missed commercial paper payments.

Banco Espirito Santo, Portugal’s second-biggest bank by market value, will probably raise private funds to boost capital, Costa said on July 18, as talks with investment banks and investors indicate interest in the lender. The Bank of Portugal governor said on that day that he wants to avoid the need to tap the recapitalization fund for Portuguese lenders, which he calls “a last resort.”

Espirito Santo International fully owns Rioforte, which owns 100 percent of Espirito Santo Irmaos SGPS SA. That company owns 49 percent of ESFG, which owns the stake in lender Banco Espirito Santo. Grupo Espirito Santo includes businesses linked to the Espirito Santo family, descendants of the bank’s founder.

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