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T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Thursday, August 31, 2023, Vol. 24, No. 175
Headlines
A R G E N T I N A
ARGENTINA: Must 'Contain Spending On Wages and Pensions', IMF Says
GAUCHO GROUP: Incurs $5 Million Net Loss in Second Quarter
B A H A M A S
FTX GROUP: Picks Galaxy to Manage its Digital Assets
B E R M U D A
BERMUDA: Slump Continues for Retail Sales
BOUCHEE: To Close Doors for Good on September 10
B R A Z I L
BRAZIL: Congress Gives Final Approval to Lula's Fiscal Plan
P U E R T O R I C O
WORLD SECURITY: Seeks to Hire Tamarez CPA as Accountant
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A R G E N T I N A
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ARGENTINA: Must 'Contain Spending On Wages and Pensions', IMF Says
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Buenos Aires Times reports that the International Monetary Fund
(IMF) has stressed to Argentina the need to "contain spending on
wages and pensions" in a lengthy statement issued outlining recent
policy steps agreed by both parties.
It also called for the updating of energy tariffs to hit key fiscal
targets and help the country's troubled economy offset huge losses
from a punishing drought, according to Buenos Aires Times.
The statement arrives two days after the IMF's board signed off on
a new US$7.5-billion disbursement for Argentina, despite an
admission from officials that key financial targets had been missed
in the country's multi-billion-dollar rescue program, the report
notes.
The board's approval of the fifth and sixth quarterly reviews of
the country's 30-month, US$44-billion IMF program is aimed at
improving Argentina's dire economic situation, the report
discloses.
Total disbursements under the deal so far amount to some US$36
billion, with the next review scheduled for November 2023, the
report notes.
Addressing the fifth and sixth reviews, conducted simultaneously,
the IMF admitted in the statement that "key program targets were
missed through end-June 2023 on account of the historic drought
along with policy slippages, requiring the approval of waivers of
nonobservance," the report says.
Additional passes were granted for "the introduction of temporary
measures that gave rise to introduction or intensification of
exchange restrictions and multiple currency practices," added the
Fund.
As a result of talks between IMF and Argentine government
officials, "modifications to the reserve accumulation target, as
well as to the primary fiscal balance and monetary financing of the
deficit target" were also approved, the report discloses.
A new package "centred on rebuilding reserves and enhancing fiscal
order" has now been agreed, according to the multilateral lender,
the report says.
'Challenging'
In the second part of the statement IMF Managing Director
Kristalina Georgieva - who met with Economy Minister Sergio Massa
in Washington - admitted that Argentina's economic situation had
become "increasingly challenging" since the fourth review of the
government's debt program, the report relays.
"Against the backdrop of high inflation and balance of payments
pressures, the authorities are implementing a new policy package to
safeguard stability and underpin medium-term sustainability centred
on rebuilding reserves and enhancing fiscal order," she said, notes
the report.
Pointing hopefully to Argentina's primary fiscal deficit target of
1.9 percent of GDP, she warned that efforts must be made to limit
spending, noting the importance of updating energy tariffs and
limiting state expenditure on wages and pensions, while protecting
priority social and infrastructure spending, the report notes.
"These actions are being complemented by temporary increases in FX
taxes on selected goods and services to also help offset the loss
of drought-related export receipts," she added.
The report notes that referencing the recent 22-percent devaluation
of the peso against the dollar, the IMF managing director observed
that "the recent realignment of the exchange rate, coupled with the
tightening of monetary policy, should continue to help support
reserve accumulation while limiting the exchange rate passthrough
to inflation."
"Going forward, the rate of crawl will be carefully calibrated to
help achieve reserve accumulation and disinflation goals, while
real interest rates will remain sufficiently positive to continue
to support demand for peso assets," said Georgieva, the report
relays.
She also warned that "interventions in the securities and futures
FX [foreign exchange] market" must be "limited and temporary,
focused on addressing disorderly conditions," the report
discloses.
Finally, the IMF chief offered praise for the boosting of "export
potential and reserves" and the "completion of the first phase" of
the President Nestor Kirchner gas pipeline, the report says.
Georgieva concluded by saying that "broad political support and
programme ownership remain critical in the near and medium term,"
admitting that "resolving the country's deep challenges will
require continued efforts by future administrations," the report
adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Alberto Angel Fernandez is
the current president of Argentina after winning the October 2019
general election. He succeeded Mauricio Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal
year 2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
S&P Global Ratings, on June 13, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC-/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is negative. S&P's
'CCC-' transfer and convertibility assessment is unchanged. None
of
its rated bond issues are affected.
S&P said the negative outlook on the long-term ratings is based
on
the risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections.
Divisions within the government coalition, and infighting among
the
opposition, constrain the sovereign's ability to implement timely
changes in economic policy.
Fitch Ratings also upgraded on June 13, 2023, Argentina's
Long-Term Foreign Currency (FC) Issuer Default Rating (IDR) to
'CC' from 'C' and affirmed the Long-Term Local Currency (LC) IDR
at 'CCC-'. Fitch typically does not assign Outlooks to sovereigns
with a rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a
default
event of some sort appears probable in the coming years,
regardless
of the outcome of upcoming elections. The affirmation of the LC
IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
GAUCHO GROUP: Incurs $5 Million Net Loss in Second Quarter
----------------------------------------------------------
Gaucho Group Holdings, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $4.98 million on $710,975 of sales for the three months ended
June 30, 2023, compared to a net loss of $5.29 million on $405,335
of sales for the three months ended June 30, 2022.
For the six months ended June 30, 2023, the Company reported a net
loss of $7.68 million on $1.16 million of sales compared to a net
loss of $7.56 million on $830,932 of sales for the same period
during the prior year.
As of June 30, 2023, the Company had $19.22 million in total
assets, $10.85 million in total liabilities, and $8.36 million in
total stockholders' equity.
Gaucho Group said, "The Company's operating needs include the
planned costs to operate its business, including amounts required
to fund working capital and capital expenditures. Based upon
projected revenues and expenses, the Company believes that it may
not have sufficient funds to operate for the next twelve months
from the date these financial statements are made available. Since
inception, the Company's operations have primarily been funded
through proceeds received from equity and debt financings. The
Company believes it has access to capital resources and continues
to evaluate additional financing opportunities. There is no
assurance that the Company will be able to obtain funds on
commercially acceptable terms, if at all. There is also no
assurance that the amount of funds the Company might raise will
enable the Company to complete its development initiatives or
attain profitable operations. The aforementioned factors raise
substantial doubt about the Company's ability to continue as a
going concern for a period of one year from the issuance of these
financial statements."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1559998/000149315223028614/form10-q.htm
About Gaucho Group
Headquartered in New York, NY, Gaucho Group Holdings, Inc. --
http://www.algodongroup.com-- was incorporated on April 5, 1999.
Effective Oct. 1, 2018, the Company changed its name from Algodon
Wines & Luxury Development, Inc. to Algodon Group, Inc., and
effective March 11, 2019, the Company changed its name from Algodon
Group, Inc. to Gaucho Group Holdings, Inc. Through its wholly owned
subsidiaries, GGH invests in, develops and operates real estate
projects in Argentina. GGH operates a hotel, golf and
tennis resort, vineyard and producing winery in addition to
developing residential lots located near the resort. In 2016, GGH
formed a new subsidiary and in 2018, established an e-commerce
platform for the manufacture and sale of high-end fashion and
accessories. The activities in Argentina are conducted through its
operating entities: InvestProperty Group, LLC, Algodon Global
Properties, LLC, The Algodon - Recoleta S.R.L, Algodon Properties
II S.R.L., and Algodon Wine Estates S.R.L. Algodon distributes its
wines in Europe through its United Kingdom entity, Algodon Europe,
LTD.
Gaucho Group reported a net loss of $21.83 million for the year
ended Dec. 31, 2022, compared to a net loss of $2.39 million for
the year ended Dec. 31, 2021. As of March 31, 2023, the Company had
$21.01 million in total assets, $8.60 million in total liabilities,
and $12.40 million in total stockholders' equity.
New York, NY-based Marcum LLP, the Company's auditor since 2013,
issued a "going concern" qualification in its report dated April
17, 2023, citing that the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
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B A H A M A S
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FTX GROUP: Picks Galaxy to Manage its Digital Assets
----------------------------------------------------
Shivani Tanna at Reuters reports that bankrupt crypto exchange FTX
has hired U.S. crypto firm Galaxy as an advisor to help hedge and
sell its crypto holdings, according to court filings.
Hedging of bitcoin and ether will provide a means to lessen FTX's
exposure to adverse price movements before their sale, the filing
said, according to Reuters.
Galaxy, owned by billionaire investor Mike Novogratz, will also
help "stake" FTX's crypto, a process where crypto is lent to
validate blockchain transactions, earning interest in the process,
the report notes.
"Galaxy Asset Management has extensive experience in areas relevant
to digital asset management and trading, including with respect to
the types of transactions and investment objectives contemplated,"
the filing said, referring to the investment advisory arm of
Galaxy, the report relays.
FTX filed for bankruptcy in November 2022 in the wake of claims
that the company misused and lost billions of dollars worth of
customers' crypto deposits, the report notes.
FTX attorney Brian Glueckstein said at a court hearing in
Wilmington, Delaware, that FTX remains on track to conclude its
bankruptcy in the second quarter of 2024, resisting a call for
expedited mediation from the court-appointed committee that
represents FTX creditors, the report adds.
About FTX Group
FTX is the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from
the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
million in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year.
According to Reuters, SBF shared a document with investors on Nov.
10, 2022, showing FTX had $13.86 billion in liabilities and $14.6
billion in assets. However, only $900 million of those assets
were liquid, leading to the cash crunch that ended with the
company filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims
agent, maintaining the page
https://cases.ra.kroll.com/FTX/Home-Index
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel, FTI Consulting, Inc., as financial advisor, and
Jefferies LLC as the investment banker. Young Conaway Stargatt &
Taylor LLP is the Committee's Delaware and conflicts counsel.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
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B E R M U D A
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BERMUDA: Slump Continues for Retail Sales
-----------------------------------------
Duncan Hall at Royal Gazette reports that the volume of retail
sales fell for the fourth straight month to March, down for nine of
the 12 months from March 2022.
The Retail Sales Index tracks the annual percentage change of
retail sales by volume, according to Royal Gazette.
The RSI fell 5.4 per cent year-over-year to March, compared with
March 2022, according to figures released by the Ministry of
Economy and Labor, the report notes.
The rate was determined after adjusting for the retail sales rate
of inflation, which was measured at 5.9 per cent in March, the
report discloses.
In value terms, retail sales increased to an estimated $101.9
million, which represented a 0.2 per cent rise in sales by value,
caused by elevated rates of inflation, the report says.
Five of the seven sectors recorded year-over-year volume sales
index decreases in March, the report notes.
The sales volume for building material stores decreased 15.9 per
cent, the report relays. The sales volume for this sector was 6
per cent below the March 2019 pre-pandemic sales level, the report
notes.
In the all other store types sector - comprising stores selling
household items, furniture, appliances, electronics,
pharmaceuticals and tourist-related goods - there was a 10.8 per
cent decrease in sales volume, the report says. The sales volume
for this sector was 4.1 per cent below the index as of March 2019,
the report discloses.
The sales volume for food stores fell 9.7 per cent, the report
relays. Food stores' sales volume decreased 10.2 per cent compared
with March 2019, the report notes.
Liquor stores' sales volume fell 2 per cent and was 6.5 per cent
higher than in March 2019, the report says.
Service stations' sales volume decreased 7.3 per cent and was 11.5
per cent below the level in March 2019, the report discloses.
Motor vehicle stores' sales volume rose 21.6 per cent, the report
notes. The sales level was 17.6 per cent above the pre-pandemic
sales volume of March 2019, the report says.
The sales volume at apparel stores rose 2 per cent and was 12.5 per
cent below March 2019, the report relays.
Overseas declarations increased 11 per cent compared with March
2022, the report discloses.
Overseas declarations were 70.9 per cent higher compared with the
pre-pandemic period of March 2019, the report recalls.
Imports via courier increased $2.5 million to $16.6 million owing
to the increased importations of optical and surgical equipment,
photographic and cinematic equipment as well as clocks and watches,
the report says.
Imports by households via sea remained the same at $7.9 million,
the report notes.
Declarations at the airport by returning residents increased $0.2
million to $3.2 million, the report relays.
Imports via the Bermuda Post Office increased $0.1 million to $0.5
million, the report says.
Excluding Sundays, there were 27 shopping days, the same as in
March 2022, the report adds.
BOUCHEE: To Close Doors for Good on September 10
------------------------------------------------
Royal Gazette reports that Bouchee, the popular French bistro in
Pembroke, is to close its doors for good on September 10.
The restaurant, located in the Outerbridge Building at 75 Pitts Bay
Road, has long been a mainstay of Bermuda's hospitality sector,
serving breakfast, lunch and dinner to a varied local and tourist
clientele, according to Royal Gazette.
However, owner Sara Masters was told by the building's owners last
December that she would be required to vacate the premises as they
pondered the property's future, the report notes. She was given
until the end of September.
Ms. Masters has been unable to find a new location for the eatery,
despite enlisting the help of an agent to find space in Hamilton or
Pembroke, the report discloses.
Ms. Masters said customers were supportive after news broke in
March that she had to find new premises, the report says.
The closure will put ten staff, including seven full-time
employees, out of work, the report notes. Ms. Masters said her
future plans are unsure.
Bouchee will close at 2.30pm on its last day of operation, the
report adds.
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B R A Z I L
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BRAZIL: Congress Gives Final Approval to Lula's Fiscal Plan
-----------------------------------------------------------
Bloomberg News reports that Brazil's lower house of congress
approved new fiscal rules, finalizing legislation meant to shore up
public finances and assuage market concerns about President Luiz
Inacio Lula da Silva's spending plans.
The report notes that lawmakers voted 379-64 in favor of the fiscal
plan, which will be sent to Lula for his signature.
The bill's passage will pave the way for Lula's administration to
align its 2024 budget plan with the new rules, according to
Bloomberg News.
It also contributed to local currency gains: the real strengthened
0.8% to 4.89 per dollar amid a broad rally triggered by a drop in
Treasury yields, the report notes. The lower house slightly
toughened the version approved by the Senate in June, removing a
provision that would have allowed the government to spend an
additional 40 billion reais ($8.1 billion), the report relays.
Congressional leaders, however, also reached a deal to allow the
government to restore that spending through the annual budget
process, the report discloses.
The rules allow the government to boost spending by a range of 0.6%
to 2.5% above the inflation rate, limited to 70% of revenue growth,
the report notes.
The fiscal framework, a major priority for Finance Minister
Fernando Haddad and Lula's economic team, will replace a so-called
spending cap that had been in place to limit expenditures, the
report adds.
Investors skeptical of the leftist government's commitment to
fiscal austerity largely welcomed Haddad's design of the plan, and
its initial passage earlier this year, recalls the report.
The lower house maintained Senate amendments that exempted funds
for education and the Federal District from the framework, notes
the report.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022
Brazilian general election. He was sworn in on January 1, 2023, as
the 39th president of Brazil, succeeding Jair Bolsonaro.
Fitch Ratings upgraded on July 26, 2023, Brazil's Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'BB', from 'BB-',
with a Stable Outlook. The upgrade reflects better-than-expected
macroeconomic and fiscal performance amid successive shocks in
recent years, proactive policies and reforms that have supported
this, and Fitch's expectation that the new government will work
toward further improvements.
In mid-June 2023, S&P Global Ratings, revised the outlook on its
long-term global scale ratings on Brazil to positive from stable.
S&P affirmed its 'BB-/B' long- and short-term foreign and local
currency sovereign credit ratings on Brazil. S&P also affirmed its
'brAAA' national scale rating, and the outlook remains stable. The
transfer and convertibility assessment remains 'BB+'. The positive
outlook reflects signs of greater certainty about stable fiscal and
monetary policy that could benefit Brazil's still-low GDP growth
prospects. Continued GDP growth plus the emerging framework for
fiscal policy could result in a smaller government debt burden than
expected, which could support monetary flexibility and sustain the
country's net external position.
Moody's credit rating for Brazil was last set at Ba2 in 2018 with
stable outlook. Moody's affirmed the Ba2 issuer ratings and
senior unsecured bond ratings in April 2022.
DBRS Inc., on August 15, 2023, upgraded Brazil's Long-Term
Foreign and Local Currency - Issuer Ratings to BB from BB (low).
At the same time, DBRS Morningstar confirmed Brazil's
Short-term Foreign and Local Currency - Issuer Ratings at R-4.
The trend on all ratings is Stable.(March 2018).
=====================
P U E R T O R I C O
=====================
WORLD SECURITY: Seeks to Hire Tamarez CPA as Accountant
-------------------------------------------------------
World Security Services Inc. seeks approval from the U.S.
Bankruptcy Court for the District of Puerto Rico to hire Tamarez
CPA, LLC as accountant.
The firm will render these services:
a) reconcile financial information to assist the Debtor in
the
preparation of monthly operating reports;
b) assist in the reconciliation and clarification of proofs
of
claim filed and amount due to creditors;
c) provide general accounting and tax services to prepare
quarterly and year-end reports and income tax; and
d) assist in the preparation of the supporting documents for
the Chapter 11 reorganization plan, including negotiation with
creditors.
Tamarez CPA will charge these hourly fees:
Albert Tamarez-Vasquez, CPA, CIRA $165 per hour
CPA Supervisor $110 per hour
Senior Accountant $90 per hour
Staff Accountant $70 per hour
The firm received a post-petition retainer in the amount of
$5,000.
Albert Tamarez Vasquez, CPA, owner of Tamarez CPA, disclosed in a
court filing that his firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Albert Tamarez Vasquez, CPA
Tamarez CPA, LLC
1519 Ave. Ponce De Leon, Suite 412
San Juan, PR 00909
Telephone: (787) 795-2855
Facsimile: (787) 200-7912
Email: atamarez@tamarezcpa.com
About World Security Services
World Security Services, Inc. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 23-01542)
on May 22, 2023, with as much as $1 million in both assets and
liabilities. Judge Maria De Los Angeles Gonzalez oversees the
case.
Carlos Alberto Ruiz, Esq., at Licenciado Carlos Alberto Ruiz, LLC
represents the Debtor as counsel.
*********
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