Correo Argentino Declares Bankruptcy
Not even the mail is safe from Argentina’s ruthless recession. Correo Argentino, a private firm running the national post office, filed for bankruptcy protection on Wednesday to dig its way out of massive debt with a cash-strapped government. The government in turn allegedly has not paid the firm millions of dollars owed. The firm said in a statement it owed $250 million to the government while the government had not paid $112 million in dues — a vicious circle increasingly common in a recession-hit economy where firms and suppliers no longer have any cash. The Argentine government is fighting a liquidity crunch of its own amid a deep three-year economic slump that has forced its national airline and even cherished soccer clubs to take similar action to seek refuge from their creditors. Argentina has repeatedly threatened in recent months to revoke Correo Argentino’s concession unless the debt was paid. The government granted a 30-year contract in 1997 to operate Correo Argentino to private holding company Sociedad Macri in return for twice-yearly payments of $53 million. Minority partners in Correo Argentino include Banco Galicia (GAL) with an 11.77 percent share, and the company’s employees who hold about 14 percent. If Correo Argentino’s plea for protection is granted by courts, it will have the possibility to renegotiate its debts.
