Mexican Lender Is Battered by Missing Money, Hidden Losses
Crédito Real, a fast-growing shadow bank, is set to declare bankruptcy as funding dries up.
Crédito Real built a booming business lending at high-interest rates to Mexican teachers and other government workers. The loans were paid back through payroll deduction, reducing the risk of nonpayment.
Now it is planning to file for bankruptcy in Mexico after it has faced growing skepticism over how it has been reporting its earnings and measuring the size of its loan portfolio.
Investors pulled the plug on the lender amid questions over why roughly half of the value of its loan portfolio, or around $1.1 billion, consisted of unpaid interest, which the company still hasn’t explained.
Mexican non-bank lender Credito Real is preparing to file for bankruptcy in the United States after going into default earlier this year, Bloomberg reported Tuesday, citing people with knowledge of the situation.
Crédito Real seeks to obtain support from existing creditors to help finance the bankruptcy process.
Source: El Economista