Creditors said that Alpha defaulted earlier this year when the privately held nonbank lender disclosed accounting errors in its Mexican segment, sending its bond prices tumbling, WSJ Pro Bankruptcy reported. Alpha has $768.4 million in debt, mostly unsecured bonds, and has lined up $45 million in emergency financing to get through chapter 11 proceedings in the U.S. Bankruptcy Court in Wilmington, Del. The Mexican segment didn’t file for bankruptcy. Alpha asked the bankruptcy court for permission “to continue operating the Colombian business without interruption to ensure that collections of all outstanding loans continue.” Founded in 2011, Alpha extends credit to government and private-sector employees in Mexico and Colombia. Customers repay the loans through payroll deductions. The company also makes small-business loans. Alpha borrows money from bondholders and uses it to lend at interest rates that average 24.4% annually in Colombia. In April, the company said that there were errors in the 2018 and 2019 financial statements for its Mexican business and that it would have to revise them. Soon after, creditors sent default notices to Alpha for, among other things, failing to accurately report its finances.
