U.S. Bankruptcy Court Approves Intrum's Restructuring Plan Amid Creditor Disputes
Next hurdle is Sweden
On December 31, 2024, a U.S. bankruptcy court issued a significant ruling in the case of Intrum, a Swedish debt collection company facing financial distress. The decision followed a combined hearing on Intrum’s Chapter 11 plan and related motions, marking a critical step in the company's efforts to address its mounting debt crisis.
Court’s Background on Intrum's Financial Distress
Intrum, which operates across several jurisdictions, encountered severe financial challenges stemming from its inability to meet debt maturities scheduled for 2026 and beyond. The company had lost access to financial markets, leaving it with limited options to refinance its obligations. Intrum's capital structure includes notes governed by U.S. law, and most of its $4.6 billion in outstanding debt was set to mature between 2025 and 2027.To address the crisis, two creditor groups emerged: one focused on 2025 maturities and another representing creditors with notes maturing between 2026 and 2028. Intrum proposed a restructuring plan that extended maturities starting in 2028 while offering creditors 10% equity in the reorganized company and cash to repurchase notes. The proposal gained overwhelming support from the 2026-2028 creditor group, which signed a lockup agreement to back the plan.
Court Ruling on Motion to Dismiss
The 2025 creditor group opposed the bankruptcy filing and sought dismissal of the case, raising several arguments:
No Immediate Financial Distress: They claimed Intrum was not insolvent and could continue paying debts for another 18 months.
Improper Venue: They argued that Intrum’s creation of a Texas entity (Intrum TX) in October 2024 was a tactic to manufacture jurisdiction in the U.S.
International Considerations: They asserted that Sweden, not the U.S., was the proper venue for restructuring.
The court rejected these arguments, emphasizing that immediate insolvency is not a prerequisite for bankruptcy filings. It found that Intrum faced clear financial distress due to its lack of market access for refinancing and looming debt maturities. The court also noted that Intrum acted in good faith by pursuing bankruptcy as a tool to preserve its business and maximize creditor recoveries. While acknowledging international considerations, the court ruled that Intrum’s Texas entity had sufficient ties to justify U.S. jurisdiction, including cash held in Texas bank accounts and guarantees on its debt issued under U.S. law. The judge highlighted that Swedish courts would independently evaluate aspects of the restructuring under their jurisdiction.
Plan Confirmation and Creditor Objections
The court also approved Intrum’s disclosure statement and confirmed its restructuring plan, overruling objections from the 2025 creditor group. These objections included claims of bad faith, disputes over original issue discount (OID) treatment, and concerns about injunction provisions limiting creditor remedies. In evaluating good faith, the court considered the totality of circumstances and concluded that Intrum filed its plan with an honest purpose to address serious financial issues while treating all creditors equitably. The objections regarding OID were deemed irrelevant for plan confirmation because they did not impact the global settlement framework underpinning the plan. The court further clarified that injunction provisions in the plan did not prevent creditors from pursuing remedies under Swedish law, ensuring that dissenting creditors retained their rights within Sweden’s legal system.
Next Steps: Swedish Reorganization
Although the U.S. court has approved Intrum’s restructuring plan under Chapter 11, significant steps remain in Sweden. A Swedish reorganization process will now handle various aspects of the plan’s implementation, including any litigation initiated by dissenting creditors such as the 2025 group. Intrum’s ability to secure overwhelming support from most creditor classes was pivotal in navigating this complex cross-border case. With this ruling, the company has taken a crucial step toward stabilizing its finances while preserving operations across its global footprint. This case highlights how multinational companies can leverage U.S. bankruptcy laws alongside local legal systems to address financial distress effectively, even amid vocal opposition from minority creditor groups.