Two of Oi’s creditors, the country’s largest banks, Banco Bradesco and Banco Itau Unibanco, have gone to court to appeal the operator’s bankruptcy declaration.
The financial institutions also called on the judicial authorities to replace Oi’s current interveners with new management and restart the company’s judicial rehabilitation plan to ensure creditors are maintained.
In effect, Mr. Bradesco and Mr. Itau have asked the court to grant Oi’s declaration of bankruptcy a stay pending a final judgment in the case.
The legal inbroglio involving Bradesco, Itau and Oi is being held within the First Private Law Chamber of the Rio de Janeiro Justice Court (TJRJ).
what the bank says
Bradesco and Itau say in their petition to the Rio court that declaring bankruptcy is not the best solution for creditors who have money to receive from Oi.
“The collapse of one of Latin America’s largest economic groups, prejudicing the maintenance of its judicial recovery, would be potentially even more detrimental not only to the entire group of creditors, but also to the public interest itself and those who contract its services,” Bradesco representatives said.
In a petition sent to TJRJ, the bank states that Oi has related agreements related to technology and connectivity services with Bradesco, Itau, and several other large companies, including Caixa Economica Federal, Santander and Petrobras.
“Caution should be exercised in declaring bankruptcy of an economic conglomerate that provides relevant services, has significant assets and is part of an organized, enforceable and creditor-beneficial payment plan approved by a general meeting of creditors,” Bradesco’s lawyers argue.
“Instead of applying measures aimed at a negotiated solution (…), the court of first instance decided to immediately declare bankruptcy, without attempting to take the steps that could elevate the company to the status of restructuring and protect the contractual relationship,” the document continues.
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Meanwhile, Itau said “extreme caution” was needed before declaring Oi bankrupt. “The purpose of this appeal is to ensure the continuation of judicial recovery, as it is the most efficient and least costly means of both satisfying creditors and maintaining business operations, and is of notorious importance in the public and private spheres,” the bank said.
Itau said Oi’s bankruptcy was declared “hastily” by the court, ignoring other viable restructuring options and the efforts of public authorities and judicial administrators.
Oi’s bankruptcy
Last Monday (10/11), Judge Simone Gastesi Shubland of Rio de Janeiro’s 7th Business Court declared Oi bankrupt, nearly 10 years after its judicial recovery.
The judge’s ruling brings to an end the drama experienced by one of the largest companies in the telephone and telecommunications market, once a national “super tele” company.
The judge said: “There is nothing more surprising about the circumstances of the group’s judicial recovery.” “Oi is effectively bankrupt,” the judge said in his order.
In his judgment, the judge also ordered an orderly liquidation of Mr Oye’s assets with a view to maximizing the amount of the remaining balance owed to creditors.
“A halt to the rampant liquidation drive would allow an orderly liquidation to proceed in order to maximize assets for the benefit of all those affected as a result of this process, in addition to ensuring uninterrupted connectivity services,” the judge said.
The judge also decided to temporarily continue Oi’s operations until the service is taken over by another company.
The Rio court’s decision came after Oi himself announced last Friday (7/11) in a joint petition with the judicial director that he was facing difficulties in meeting his debts and that he might enter bankruptcy.
Documents filed in Rio’s 7th Business Court say the operator may not be able to support the full payment of super-bankruptcy debts and may not be able to comply with the judicial restructuring plan that is in place.
In fact, the company acknowledged to the court that it may not be able to pursue measures to maximize cash flow. Non-competitive debts are debts that arise outside of the judicial recovery process.
In September, the court ordered the removal of Oi’s former management team and the creation of a transition plan to ensure continuity of services provided by the operating company. An intervenor was also appointed to handle the case.
Judge Simone Gastesi Shubland of Rio de Janeiro’s 7th Business Court also suspended the charges against Oi in order to preserve the company’s cash flow.
Hello, I’m on my second judicial recovery.
In March 2023, Oi entered judicial recovery for the second time. The request, submitted to Rio de Janeiro’s Seventh Business Court, was accepted by Judge Fernando Cesar Ferreira Viana three months after the conclusion of the initial proceedings.
In a new judicial recovery, Oi reported that it owed R$43.7 billion, of which R$1 billion related to labor debts.
Oi received judicial relief for the first time in 2016 with an accumulated debt of R$65 billion. The process was finally completed in December 2022, six years later.
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