Oy shares, traded on the Brazilian Stock Exchange (B3), fell sharply on Monday (10/11) after the company admitted to the court that it could face bankruptcy due to difficulties in repaying its debts.
At around noon (Brasilia time), the company’s common stock plunged 14.29% to a price of 0.24 reais. Preferred shares fell by 10.3% to R$4.18.
According to documents filed by Oi in collaboration with its judicial manager in Rio’s 7th Business Court, 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 in place.
In fact, the company acknowledged to the court that it may not be able to pursue measures to maximize cash flow. Non-consensual debts are debts that arise outside of the judicial recovery process.
If the court orders the judicial liquidation of Oy, the company’s judicial manager (Bruno Rezende) has requested permission for the operating company to temporarily maintain operations to ensure the fulfillment of all ongoing services.
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.
judicial recovery
In March 2023, Oi entered judicial recovery for the second time. The request, submitted to Rio de Janeiro’s 7th 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 65 billion reais. The process was finally completed in December 2022, six years later.
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