#CuraumaCase / What is the Origin of the Legal Dispute in the #CuraumaCase? (Chapter I)
Chapter I (Chapter II)
What is the Origin of the Legal Dispute in the #CuraumaCase?
In 2004, a Chilean insurance and lender company, Euroamerica Seguros de Vida S.A., and Empresas CB (CB) and its real estate subsidiary Curauma S.A., led by Chilean Entrepreneur Manuel Cruzat Infante, entered into a financing agreement for $25 million USD (715,000 Unidades de Fomento (UF), an inflation-indexed unit of account used in Chile).
In 2004, a Chilean insurance and lender company, Euroamerica Seguros de Vida S.A., and Empresas CB (CB) and its real estate subsidiary Curauma S.A., led by Chilean Entrepreneur Manuel Cruzat Infante, entered into a financing agreement for $25 million USD (715,000 Unidades de Fomento (UF), an inflation-indexed unit of account used in Chile).
This agreement, structured as a lease with a repurchase option, aimed to acquire land in the upper Valparaíso area in center Chile, for the development of the Curauma and Las Cenizas projects (6177 acres).
Payments and Returns
Between 2004 and 2013, CB paid a total of $36 million USD (1,040,775 UF) to Euroamerica Seguros de Vida S.A., representing an annual compounded return of UF + 7.36%.
Additionally, to regain ownership of the land, CB was required to pay an extra $31 million USD (907,081 UF) by August 31, 2013, which would have increased the return to UF + 21.43% annually.
The Dispute
In August 2013, Curauma S.A. filed a lawsuit demanding the return of the land, claiming it had been fully paid for. Just days before this legal action, Euroamerica Seguros de Vida S.A. "sold" the land to Administraciones y Proyectos Euroamerica S.A. (APE), a related company.
This lawsuit significantly impacted the collateral for a loan that Banco de Chile had granted to APE, leading to financial complications. Furthermore, there was a considerable difference between the appraised value and the sale price between these related parties, which could have tax implications with the Chilean Internal Revenue Service (Servicio de Impuestos Internos -SII).
#CasoCurauma #CuraumaCase
Note: The Unidad de Fomento (UF) is an inflation-adjusted unit of account used in Chile for large financial transactions, such as real estate and loans. Its value is updated daily according to the Consumer Price Index (CPI) to maintain purchasing power. As of September 19, 2024, 1 UF is equivalent to $40,71 USD.
Payments and Returns
Between 2004 and 2013, CB paid a total of $36 million USD (1,040,775 UF) to Euroamerica Seguros de Vida S.A., representing an annual compounded return of UF + 7.36%.
Additionally, to regain ownership of the land, CB was required to pay an extra $31 million USD (907,081 UF) by August 31, 2013, which would have increased the return to UF + 21.43% annually.
The Dispute
In August 2013, Curauma S.A. filed a lawsuit demanding the return of the land, claiming it had been fully paid for. Just days before this legal action, Euroamerica Seguros de Vida S.A. "sold" the land to Administraciones y Proyectos Euroamerica S.A. (APE), a related company.
This lawsuit significantly impacted the collateral for a loan that Banco de Chile had granted to APE, leading to financial complications. Furthermore, there was a considerable difference between the appraised value and the sale price between these related parties, which could have tax implications with the Chilean Internal Revenue Service (Servicio de Impuestos Internos -SII).
#CasoCurauma #CuraumaCase
Note: The Unidad de Fomento (UF) is an inflation-adjusted unit of account used in Chile for large financial transactions, such as real estate and loans. Its value is updated daily according to the Consumer Price Index (CPI) to maintain purchasing power. As of September 19, 2024, 1 UF is equivalent to $40,71 USD.