Fabricato Falls Into Bankruptcy
Medellin-based textile giant Fabricato S.A. announced July 12 in a filing with Colombia’s Superfinanciera oversight agency that it has formally entered bankruptcy protection.
The bankruptcy filing “has as its objective the protection of credit and the recovery and conservation of the company as a unit of economic exploitation and source of employment, through reorganization and judicial liquidation processes,” according to Fabricato.
The reorganization “aims to continue the path of recovering the most important textile company in Colombia, which has been affected in the last two years — 2023 and 2024 — by factors impossible to control, not only by the administration of the company, but also by the textile-clothing chain,” the company added.
Fabricato further cited the catastrophic impacts of “smuggling and money-laundering through textile products, clothing, fabrics and threads” by illegal players in the Colombian textile markets.
Other factors include “importation and dumping of those same products” along with a “decrease in consumption of Colombian textile products,” as well as an “increase in the value of inputs and raw materials,” according to Fabricato.
As Fabricato announced earlier this year, its Denim fabric line has been especially savaged by below-cost imports and punitive financing costs, resulting in big financial losses.
As for continuing losses in 2024, Fabricato cited declines in consumer demand for clothes and textiles, along with “shortages of supplies and raw materials,” along with higher prices for power this year — during the drought months in Colombia’s mainly hydropower-based electric grid.
“After a series of proposals by Fabricato and a negotiation process with financial creditors that could not be finalized, the results of 2023 and so far in 2024 have strongly impacted the company’s cash flow, preventing timely compliance with the company’s obligations with suppliers, employees, financial creditors and tax obligations,” the company added.
