Oi seeks protection from the courts and paves the way for a new court-supervised reorganization

Oi filed this Wednesday (1st) with a request for urgent precautionary relief from the 7th Business Court of the TJRJ (Court of Justice of the State of Rio de Janeiro) to prevent its assets from being blocked at the request of creditors. The company claims to have debts of R$ 29 billion.

The measure paves the way for Oi to file a request for judicial recovery, which can be filed within 30 days after the injunction is granted. If confirmed, it will be the company’s second court-supervised reorganization, whose previous process —the largest in Brazil’s history— ended just over a month ago, in December.

The request made by Oi to Justice this Wednesday is similar to the one made by Americanas in January, and aims to anticipate the effects of a judicial recovery. The retailer’s crisis, after the revelation of BRL 20 billion in “countable inconsistencies”, is even cited by Oi as an argument in favor of its own request.

Sought, Oi did not respond until the publication of this report.

According to the document, drawn up by Basilio Advogados, Barbosa Mussnich Aragão Advogados and Salomão Kaiuca Abrahão Raposo Cotta, to which Sheet had access, the request is due to “imminent risk of irreparable damage”, in order to guarantee the preservation of the company’s activities.

Basilio Advogados and Salomão Kaiuca Abrahão Raposo Cotta are the same law firms responsible for Americanas’ lawsuit.

“The measure now pleaded is not new for the Rio de Janeiro judiciary, even more so after the emblematic (and very recent) injunction granted to Grupo Americanas by the MM. “, says Oi in the order.

In the text, the company also recognizes that it has just left the largest judicial recovery process in the history of Brazil, but that, “unfortunately, several unpredictable, uncontrollable factors, and its current economic and financial situation made it essential to resort to judicial protection for implement a new stage of its restructuring and guarantee the preservation of the company, as a great generator of jobs and income”.

Oi also says that the first judicial reorganization was “unquestionably successful”, but that the company’s capital structure remains unsustainable.

“There are approximately BRL 29 billion in financial debts alone, with ECA holders, bondholders and National Banks, and more than half of this amount is linked to the US currency, running the risk of increase due to exchange rate fluctuations, ” says the document.

In the guardianship request, the company says that the non-payment of more than R$ 600 million due on the 5th of February would result in the early maturity of almost the entire financial debt (R$ 29 billion), due to the clauses provided for in their financial contracts.

Oi also argues that the change in strategy after the last judicial recovery, with a focus on fiber optic services, allowed it to reduce indebtedness, but not sufficiently.

In addition, regulatory assumptions would not have materialized, negatively impacting tele’s operations. The company still claims to have invested “time and money” in recent months in an attempt to reach an out-of-court settlement with its main financial creditors.

Filipe Denki, director of the Commission for Business Recovery and Bankruptcy of the Federal Council of OAB and partner at Lara Martins Advogados, classifies the request for guardianship as “a bomb”, given that Oi has just left a judicial recovery.

He recalls that, if the declared liabilities are confirmed after a possible request from RJ, Oi will appear twice on the list of the five largest recovery operations in the history of Brazil: in second and fifth place.

The ranking is led by Odebrecht (R$ 80 billion), followed by Oi (R$ 65 billion) and Samarco (R$ 55 billion). The Americanas lawsuit appears in fourth place (R$ 43 billion).

The legislation prohibits companies from filing for judicial recovery again within a period of five years. However, the lawyers argue in the request that the first recovery does not constitute an obstacle to the granting of the precautionary measure, given that five years have passed since the granting of the last process, which took place in February 2018.

Oi filed for judicial recovery in June 2016, at the Court of Justice of Rio de Janeiro, after accumulating a gross debt of approximately R$ 65 billion, with more than 55 thousand creditors.

TIM, Claro and Telefônica Brasil won the right to Oi’s mobile assets at auction at the end of 2020 with a joint proposal of R$ 16.5 billion, but the value is the subject of dispute.

In December, as revealed by the Panel column, members of President Luiz Inácio Lula da Silva’s (PT) transition group had expressed concern about Oi’s judicial recovery. At the time, the recovery process was still ongoing.

Members were concerned about the risk of the company going bankrupt and leaving the Union to assume the concession or not having continuity of services, harming the Brazilian population.

Collaborated with Daniele Madureira