Staff Report

Top Takeaways:

• Green light in New York: On June 11, Judge Martin Glenn granted liquidators authority over Chen Zhi’s U.S. assets.
• Liquidators already run Tabacalera: Interpath liquidator Paul Pretlove has served as president of both Tabacalera SL and Allied Cigar Corporation SL since Feb. 25, while longtime CEO Fernando Domínguez remains in charge of daily operations.
• Buyers are circling: Renovaire Group, an Abu Dhabi group reportedly holding 42.9% of Allied Cigar, is viewed as the leading candidate.

A U.S. bankruptcy judge has cleared the way for the eventual sale of the controlling stake in the company that co-owns Habanos S.A., the global marketing and distribution company for Cuban cigars, held by Chen Zhi, a sanctioned Chinese businessman and former Cambodian resident.

The move marks the most significant legal development in the dispute since U.S. and U.K. sanctions upended the Cuban cigar industry last year.

In a June 11 recognition order, Chief Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York recognized the British Virgin Islands (BVI) liquidation proceedings involving Chen’s offshore holding companies and granted the liquidators broad authority over U.S.-based assets.

The ruling strengthens Interpath Advisory’s efforts to take control of and ultimately market Chen’s 57.1% interest in Allied Cigar Corporation SL, the parent organization of Tabacalera (formerly the premium cigar division of Imperial Brands), the Spanish company that co-owns Habanos S.A. with Cuba’s state tobacco interests.

Chen’s 57.1% interest in Allied Cigar indirectly represents a 50% ownership stake in Habanos S.A., because Tabacalera and Cuba’s state tobacco interests each own half of Habanos.

In January, Zhi, was arrested in Cambodia and transferred to China, where he is expected to face investigations into bribery, money laundering, and other alleged offenses.

The Background

The Cuban cigar industry has been navigating the fallout from sanctions imposed on Cambodian-based businessman Chen Zhi since October 2025.

The sanctions triggered widespread disruption across the premium cigar supply chain. Industry publications and distributors reported rationed Cuban cigars in the United Kingdom, banking restrictions affecting distributors in Belgium and Germany, and severe financial stress at Tabacalera SL, the Spanish distribution group at the center of the ownership structure.

New York Clears the Liquidators

The June 11 opinion issued by Glenn in the Chapter 15 recognition proceedings concerning the British Virgin Islands liquidation of entities controlled by Chen, including Simply Advanced Limited, the parent company of Allied Cigar Corporation SL.

The court recognized the BVI liquidation proceedings as “foreign main proceedings” under U.S. law, granting Interpath Advisory some authority to act with respect to U.S.-located assets, conduct discovery involving U.S. financial institutions, and coordinate with U.S. authorities.

The ruling also rejected objections filed by Hong Kong restructuring specialist Cosimo Borrelli, who claimed to have been appointed as director of 25 of the 30 BVI entities under powers of attorney granted by Chen before Chen’s reported detention in China. Glenn found that the BVI court orders had replaced the authority of all directors with the liquidators, leaving Borrelli without standing to challenge the New York proceedings.

The court overruled Borrelli’s objections in their entirety.

The ruling represents a significant setback for Borrelli’s challenge. During testimony, Borrelli acknowledged that he did not know who ultimately funded the legal fees for the effort.

Spain Already Under Interpath Control

While the New York ruling attracted attention, another major development had already occurred in Spain. Records from the Boletín Oficial del Registro Mercantil (BORME), Spain’s official commercial registry, show that on Feb. 25, 2026, Interpath Advisory partners Paul Pretlove and David Standish were formally appointed as directors of both Tabacalera SL and Allied Cigar Corporation SL. Pretlove was also appointed president of both companies.

Although the appointments appeared in the registry only on June 1, they took effect more than three months earlier. Interpath confirmed the changes. “Following the restoration of control over the companies, the sole shareholder resolved to reconstitute a board of directors,” the firm said.

Interpath also confirmed that day-to-day operations remain under the existing management. “The day-to-day management and operations of the group are overseen by its existing management,” Interpath stated.

Fernando Domínguez Valdés-Hevia remains the chief executive officer, and no legal challenge has been filed regarding the Spanish appointments. The move effectively gave Interpath operational control of the business months before it secured judicial recognition in the United States.

Tabacalera Came Close to Insolvency

The urgency of Interpath’s intervention became clearer from testimony Pretlove gave under oath at a May 13 deposition in New York. According to Pretlove, Tabacalera faced a severe financial crisis in the weeks after the October 2025 sanctions. Banks froze accounts, withdrew short-term financing, and disrupted the company’s ability to pay suppliers and employees.

Pretlove testified that Interpath had “prevented a full Spanish insolvency proceeding.”

The February 2026 pre-insolvency filing, publicly described at the time as a precautionary measure, was in fact a response to a genuine financial emergency. Pretlove also testified that Allied Cigar Corporation generates more than $300 million in annual EBITDA, underscoring the asset’s value, now under the liquidator’s control.

Buyers Already at the Table

Pretlove also confirmed under oath that active discussions with potential buyers are underway and that confidentiality agreements have already been executed. He further testified that he had been in contact with representatives of minority shareholders shortly before his deposition.

The most detailed public reporting on a potential buyer has come from the Spanish newspaper El Confidencial, which identified Renovaire Group Holding RSC as the leading contender. According to the reporting, Renovaire already owns 42.9% of Allied Cigar and could seek to consolidate its ownership by acquiring Chen’s stake.

Corporate records reviewed by this writer indicate that Renovaire was incorporated in the Abu Dhabi Global Market on Sept. 20, 2024, as a Restricted Scope Company with Special Purpose Vehicle status. The company’s ultimate beneficial ownership remains undisclosed. El Confidencial reported that the vehicle is linked to members of the United Arab Emirates’ royal families, though Renovaire has not publicly confirmed this characterization.

Two Major Hurdles Remain

Despite progress in New York and Spain, two significant obstacles remain between Interpath and a completed transaction.

First, the Hong Kong High Court froze HK$8.94 billion in assets linked to Chen on May 4, including entities in the Allied Cigar ownership chain. A further hearing is scheduled for Aug. 3. Until that matter is resolved, competing claims across multiple jurisdictions remain active.

Second, any sale of Chen’s stake will require approval from the BVI court overseeing the liquidation. Pretlove confirmed this requirement during his deposition. “If I were to sell the shareholding in the Allied Cigar Group business, I would fully expect to go to the BVI Court and get sanction for a sale of that asset,” he testified.

The conversion of Interpath’s current provisional liquidation mandate to a full liquidation proceeding remains pending before the BVI court, and no hearing date has been publicly announced.

For now, however, the direction of travel appears increasingly clear. Interpath controls the Spanish operating companies, has secured recognition from a U.S. bankruptcy court, and is actively engaging with potential buyers.

What remains is securing the final approvals needed to complete what could become one of the most consequential ownership changes in the modern history of the Cuban cigar business.

The original memorandum opinion of the U.S. Bankruptcy Court for the Southern District of New York (SDNY) is available here. The court cases are officially filed under Case No. 1:26-bk-1076 in the SDNY.