efforts— no local recognition in Chile of a foreign proceeding was filed, either as a main or non-main proceeding, nor a parallel reorganization proceeding was filed.
Assumption and Rejection of Executory Contracts:
Under Chapter 11 rules, the debtor may, with court authorization, assume or reject executory contracts. This allows the debtor to retain those agreements which are valuable to its business, provided it cures most existing defaults and performs all its obligations thereunder going forward, and to reject those contracts that are no longer beneficial, leaving the counterparty with a damages claim that can be restructured in the Chapter 11 case with other unsecured prepetition claims. However, under Chilean law, contracts cannot be rejected.
This was not a major commercial issue, as most executory contracts were assumed. However, leveraging its rejection right, WOM was able to engage in private negotiations with certain of its counterparties, entering into a series of settlement agreements that renegotiated certain agreements on more favorable terms. Motion to dismiss During the proceeding an Ad-Hoc Group of WOM bondholders tried to dismiss the Chapter 11 cases, arguing the U. S. court lacked jurisdiction since WOM operates in Chile and claimed the filing was in bad faith.
WOM and its affiliates challenged the motion to dismiss, arguing that U. S. jurisdiction was valid because the companies held U. S. A. assets and most of the debt was governed by U. S. law. Another important point of WOM defense emphasized that Chilean law bars foreign affiliates from filing in Chile and that as a consequence Chapter 11 offered a better tool for the restructuring efforts.
Ultimately, the parties reached an agreement under which the Ad Hoc Group withdrew its motion to dismiss the Chapter 11 proceedings.
Forcing Shareholder’ s Action: Legal Limits and Negotiated Outcomes:
WOM’ s approved reorganization plan included provisions for a change of control, which involved restructuring the ownership structure of the company. Chilean corporate law in principle does not allow for forced sales, meaning that shareholders could not be compelled to divest their ownership.
To address this issue, WOM and its creditors reached a settlement agreement with WOM’ s existing shareholders. The transaction involved the shareholders committing to pay certain amounts of money and to fully cooperate throughout the change of control process, ensuring that the transition was completed in compliance with all legal and regulatory requirements.
As a result, in March 2025, following a yearlong restructuring proceeding, the company successfully emerged from Chapter 11 proceedings, having reduced its debt by over US $ 650 million. In parallel, it executed a rights offering valued at US $ 500 million and issued new senior secured bonds totaling US $ 332 million.
The company also entered a new phase with a revised ownership structure. This included the exit of the British investment fund Novator Partners, which had previously controlled the company. In its place, an ad hoc group of bondholders took control of WOM, in a deal valued at US $ 1.6 billion.
Following the change of control, WOM’ s former CEO, Chris Bannister-who had become a local celebrity by participating in WOM’ s ad campaigns- returned to lead the company, signaling a renewed focus on operational excellence and market competitiveness.
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