The Luxembourg Court of Appeal has rejected a petition from Rioforte Investments, one of the Espírito Santo Group of companies, that aimed to allow its directors to wind up the company in a controlled management process.
Rioforte now will have its parts disposed of by a court appointed administrator and is bankrupt.
In a brief statement, the court indicated that it had heard the applicants and the prosecutor, yet considered the appeal presented by Rioforte as 'baseless,' therefore the court’s original decision of 17 October to reject Rioforte’s application for controlled management today is confirmed.
On 27 October, Rioforte Investments announced that it would appeal the decision of the Luxembourg Commercial Court, stating that its management was best placed to run down the company and sell off its various parts because only it knew the intricate web of business relationships and the players in the various markets in which its subsidiaries operated.
At the time Rioforte stated, "this appeal arises from the strong conviction of the directors of Rioforte that a controlled management process would better serve the interests of all creditors via a disposals programme and debt restructuring.”
The Luxembourg Court now has rejected all four controlled management applications submitted in July by companies of the Espírito Santo Group, namely; Espírito Santo International, Rioforte Investments, Espírito Santo Financial Group and Esfil
The companies had fled to the Luxembourg court for protection from their creditors after BES presented half year losses of €3.6 billion and was split into two parts by the Bank of Portugal, causing the systemic collapse of the dependent Espírito Santo offshoots.
The main creditor was Portugal Telecom which was owed €900 million by Rioforte, a sum that it failed to pay back, thus causing turmoil within the PT boardroom and hastening the collapse of the Espírito Santo house of cards.
