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Oi restructuring plan denied recognition in Portugal

Por: Latin LawyerImprimirVisualizar em PDF

A Portuguese court has refused to recognise the US$20 billion restructuring plan for Brazilian telecoms company Oi on the grounds that the matter is not yet closed – taking the opposite line to a recent New York court ruling.

Oi, Brazil's largest fixed-line telecommunications company, announced on 1 August that the Commercial Court of Lisbon had declined to recognise the plan for the company and four of its subsidiaries.

The press release includes a Portuguese-language copy of the decision, issued on 30 July, in which the court found that it could only recognise the decision issued by a Brazilian court approving the plan if it was final and the matter had closed.

Oi's restructuring plan has faced a litany of legal challenges from shareholders since it was approved by the Rio court in January.

The company's direct and indirect shareholders, Pharol and Bratel, are pursuing appeals after an initial partial reconsideration request was denied. They claim the plan's confirmation without prior shareholder approval violated their voting rights.

The shareholders are also understood to have appealed a November order from the Rio court in which it revoked the powers of allegedly conflicted Oi officers' vested authority over the restructuring in its CEO – a decision that was crucial to getting the plan through.

Outside the courts, Pharol and Bratel are also challenging the plan in related mediation and arbitration proceedings.

Neither the plan nor the order approving it have been stayed pending the challenges.

Oi said it will appeal the Lisbon court's decision because it is inconsistent with two earlier judgments it already made, in which it recognised the Brazilian judicial reorganisation proceedings.

The company also said the court's denial of recognition was "in disaccord" with decisions already granted by courts in New York and the Netherlands in June.

"The judgment was grounded on formal aspects and the Portuguese Court has not commented on the Plan's merits," read Oi's announcement.

"Oi reiterates that this judgment does not affect the integrity, validity and complete effectiveness of the Plan," it added.  

White & Case LLP acted as Oi's international counsel on its multijurisdictional restructuring. A team led by partners Richard Kebrdle and Mark Bagnall in Miami and Laura Prater in London advised the company on its English and New York law-governed bond debt and export credit agreements.

White & Case also advised the company on US and English law issues arising in the Portuguese proceedings, as well as its insolvency proceedings in Brazil, the US, the Netherlands, the UK and the Cayman Islands.

Oi's turnaround plan is the largest debt restructuring ever carried out in Latin America. It allows bondholders to swap around 75% of debt for equity, while raising new capital totalling between 7.2 billion Brazilian reais (US$1.9 billion) and 12 billion reais (US$3.2 billion).

Creditors approved the plan in December, after a 15-hour meeting attended by 1,000 people and held in an Olympic sports venue, before the 7th Corporate Court of Rio de Janeiro rubber-stamped the plan in January.

Oi has already secured recognition of the plan from the US Bankruptcy Court for the Southern District of New York in June, and the Dutch District Court confirmed Oi's Brazilian plan as it applied to Dutch subsidiaries Oi Coöperatief and Portugal Telecom International Finances that same month.

In July, the New York court gave full force and effect to the restructuring plan, dismissing rejections from shareholders who argued the court should wait until the Brazilian legal challenges were resolved.

According to a securities filing reported by Reuters, Oi has called a shareholders' meeting to vote on a 4 billion reais (US$1.07 billion) capital injection. The meeting, set to take place on 3 September in Rio, will also see shareholders consider a new board of directors and a number of by-law changes. 

Portuguese telecoms company Pharol controls all of Bratel's shares, which in turn holds 22.24% of Oi's total share capital.

This article was first published by Latin Lawyer's sister publication Global Restructuring Review on 2 August.

International counsel to Oi on its restructuring

White & Case LLP

Partners Richard Kebrdle, Mark Bagnall, John Cunningham and Jason Zakia in Miami, partner Donald Baker in São Paulo, partners Laura Prater, Ian Wallace, Charles Balmain, Richard Pogrel, Christopher Czarnocki in London, partners Christopher Shore, Jonathan Michels and Ray Simon in New York, and partners John Willems and Christophe Von Krause in Paris

In the 7th Corporate Court of the Capital of the State of Rio de Janeiro

Judge Fernando Viana

Counsel to Oi

BMA - Barbosa, Müssnich, Aragão

Partners Luiz Antonio Sampaio de Campos, Sergio Savi, Rafael Calabria and Felipe Evaristo dos Santos Galea in Rio de Janeiro

Rosman Penalva Souza Leao Franco Avogados

Partners Paulo Penalva Santos and Luiz Aberto Clonna Rosman in Rio de Janeiro

Basilio Advogados

Partner Ana Tereza Basilio in Rio de Janeiro

White & Case LLP

Partner Richard Kebrdle in Miami


Counsel to Jasper Berkenbosch as bankruptcy trustee of Coöp

E.Munhoz Advogados

Partner Eduardo Munhoz and associates Joäo Vincente Carvalho, Carolina Iwamoto, Ana Luiza Arguello and Ana Elisa Laquimia in São Paulo

Jones Day

Partner Corinne Ball in New York and partner Louis Fischer in Washington, DC


Counsel for the International Bondholders' Committee

Sergio Bermudes Advogados

Marcelo Carpenter and Luis Tomas Alves de Andrade in Rio de Janeiro


Partner Allan Brilliant in New York


Counsel to the Ad Hoc Group of bondholders

Pinheiro Neto Advogados

Partner Guiliano Colombo in São Paulo

Cleary Gottlieb Steen & Hamilton LLP

Partners Richard Cooper and Luke Barefoot in New York


Counsel to Bratel (Pharol)

Cescon, Barrieu, Flesch & Barreto Advogados

Partners Maria Cristina Cescon, Fábio Rosas and Tiago Lopes, and associates Guilherme França, Fernanda Montorfano, Thenard Figueiredo and Juliana Vasquez in São Paulo

Andrade Fichtner Advogados

Partners Jose Antonio Fichtner, Sergio Nelson Mannheimer and Julio Rebello Horta, and associates Marcelo Dickstein and Eduardo Cardoso in Rio de Janeiro


Counsel to Societe Mondiale Fundo

Galdino, Coelho, Mendes Advogados

Partners Joao Mendes, Rafael Pimenta and Lia Stephanie Saldanha Pompili in Rio de Janeiro


In the US Bankruptcy Court for the Southern District of New York:

In re: Oi Brasil Holdings Coöperatief and In re: OI S.A. et al.

Judge Sean Lane


Counsel to Aurelius Capital Management:

Kramer Levin Naftalis & Frankel

Partners Kenneth Eckstein and Bradley O'Neill, special counsel David Blabey Jr and associate Andrew Dove in New York


In the United States Bankruptcy Court for the Southern District of New York

In re Oi S.A., et al.

Judge Sean Lane

Counsel to Antonio Reinaldo Rabelo Filho as foreign representative

White & Case LLP

Partner John Cunningham and associate Mark Franke in New York, partner Richard Kebrdle and assoicate Laura Femino in Miami and partner Jason Zakia in Chicago


Counsel to Pharol and Bratel affiliates

Greenberg Traurig LLP

Associate Ryan Wagner in New York and shareholders Mark Bloom and Paul Keenan in Miami


Counsel to Jasper Berkenbosch, insolvency trustee of Oi Brasil Holdings Coöperatief

Jones Day

Partners Corinne Ball, Stephen Pearson and Lauri Sawyer, associate Bryan Kotliar, associate Anna Kordas in New York, and partner Geoffrey Irwin in Washington, DC


Counsel to the International Bondholder Committee


Partners Allan Brilliant, Shmuel Vasser and Benjamin Roseberg in New York


Counsel to the Steering Committee of the Ad Hoc Group of Bondholders

Cleary Gottlieb Steen & Hamilton LLP

Partners Richard Coöper and Luke Barefoot, and associate Samuel Hershey in New York


Counsel to Aurelius Capital Management

Kramer Levin Naftalis & Frankel

Counsel David Blabey in New York

Norton Rose Fulbright

Partners Howard Seife and Marian Baldwin, and counsel Francisco Vazquez in New York


Counsel to Solus Alternative Asset management

Davis Polk & Wardwell LLP

Partner Timothy Graulich and associate David Schiff in New York


In the Amsterdam District Court

Court-appointed insolvency trustee to Oi Brasil Holdings Coöperatief

Jones Day

Partner Jasper Berkenbosch in Amsterdam


Court-appointed insolvency trustee to Portugal Telecom International Finance


Partner Marcel Groenewegen in Amsterdam

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