Court accepts Oi’s second request for bankruptcy protection

The business court of Rio de Janeiro on Thursday accepted the second request for bankruptcy protection by Brazilian telecommunications company Oi. The company announced in December the end of the previous recovery process, which took six years to complete.

The decision suspends debt executions, search and seizure warrants by the company’s creditors and gives Oi a 60-day deadline to present a new recovery plan.

 Wald Administração de Falências and K2 Consultoria Econômica were appointed as administrators of the process.

In the new petition, filed on March 1, the company said it has BRL 43.7 billion (USD 8.4 billion) in debts, and BRL 1 billion in labor obligations.

Analysts say this new recovery process is more difficult than the first because the company has no more assets to sell, a crucial step to reduce expenses and raise funds to pay debts. Moreover, the confidence of creditors and investors is also seriously shaken.

Oi filed its first request in June 2016 — at the time it was the largest bankruptcy case in Brazil’s history, with almost BRL 65 billion in debt and more than 55,000 creditors. Its recovery plan was approved in 2018.

To restructure, the company had to divide its assets into five mobile production units (UPIs), sold over the last three years. In February last year, antitrust watchdogs greenlit the sale of its mobile operations, which took place in December 2020.

The company seemed to be fine in the first quarter of 2022, with financial debts of BRL 33.4 billion, according to its earnings reports. Their executives stressed at the time that if the proceeds from the sale of its assets are considered, the debt would fall by 42 percent to just BRL 19.1 billion. 

The company will disclose its first quarter results for the 2023 fiscal year on March 23. The total debt informed in the second bankruptcy protection request, however, indicates the company’s situation deteriorated again throughout 2022.