Bankrupt Brazilian operator Oi wins court protection in US
28 July 2016 | Alan Burkitt-Gray
The US Bankruptcy Court has given Brazilian mobile operator Oi protection against creditors while the company tries to restructure.
Oi, which has 74 million customers, filed for bankruptcy in Brazil in June, owing money to banks and Brazil’s regulator. Now a US judge has given Oi chapter 15 bankruptcy protection, the equivalent for foreign companies of the more usual chapter 11 of US bankruptcy laws.
According to reports a hedge fund, Aurelius Capital Management, has built up shares in Oi while a group of 70 bondholders, operating as an ad hoc steering committee, has been working towards a restructuring of the company.
A Brazilian court has appointed accountants PricewaterhouseCoopers Assessoria Empresarial and a law firm, Escritorio de Advocacia Arnoldo Wald, as Oi’s administrators. They will oversee the recovery process, said the court.
According to court papers, Oi is blaming a “perfect storm of economic strain at the corporate, sector-wide, and national level”, but the company built up debt merging with Brasil Telecom and then in a failed merger with Portugal Telecom, which later became part of French group Altice. CEO Bayard Gontijo resigned in June.