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Caixa calls for court to declare Odebrecht bankrupt

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Caixa calls for court to declare Odebrecht bankrupt

Caixa Econômica Federal has asked Brazilian courts to declare the scandal-plagued construction giant Odebrecht bankrupt, O Estado de S. Paulo reported.

In addition, the state-run bank demanded that creditor banks appoint new management and directors at the company if it is not liquidated.

Caixa, whose exposure to Odebrecht is about 2.2 billion reais, has already filed legal complaints over the judicial recovery proceedings of the engineering conglomerate, citing lack of information and clarity over the plan.

Fellow state-run Banco do Brasil SA also requested the annulment of the recovery process, due to its disapproval of part of the process that seeks to convert Odebrecht's debt into profit-sharing securities, to be paid out in dividends if and when companies inside the group start generating profits.

A potential bankruptcy by the conglomerate would entail the restructuring of an estimated 51 billion reais. Odebrecht filed for bankruptcy in June after years of involvement in corruption and bribery investigations. The company has a six-month term to prepare a recovery plan, which its creditors will vote on.

Earlier in 2019, Caixa President Pedro Guimarães said the bank had already provisioned 95% of the debt it is owed from Odebrecht. Other Brazilian banks have also provisioned against their exposure to the company.

As of Oct. 3, US$1 was equivalent to 4.09 Brazilian reais.