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Creditors approve Oi restructuring plan

Por: Latin LawyerImprimirVisualizar em PDF

After months of skirmishes in courts around the world, a majority of creditors for the Brazilian telecoms company Oi have voted to approve a US$20 billion restructuring plan in what is the country's largest-ever bankruptcy.

Brazil's telecom regulator Anatel, to which Oi owes billions of reais in fines, was the only major creditor group to vote against the plan in the early hours of 20 December, which will reportedly see bondholders swap their debt for about 75 per cent equity, and raise 4 billion Brazilian reais (US$1.216 billion) in capital.

The 4am vote ended a 15-hour meeting held at the 22,000 square metre RioCentro convention centre in Rio de Janeiro, a former Olympic boxing venue chosen to house the more than 1,000 people in attendance.

In a press statement, Oi says the plan "serves all stakeholders in a balanced manner and guarantees the operational viability and sustainability of the reorganisation entities".

BMA - Barbosa, Müssnich, Aragão partner Sergio Savi leads the legal team acting for Oi and tells Latin Lawyer's sister publication GRR the extent of agreement was impressive. The deal had almost 100% agreement across creditor classes and strong support from public banks BNDES, Banco do Brasil and CAIXA, he says.

"I've never seen such dedication from the public banks," Savi says. "All the stakeholders came to an impressive deal."

Savi says his focus will now turn to implementing the plan, which contemplates a commitment from creditors to subscribe to the capital increase. "There's still a lot to do," he notes, adding the high level of approval will make it difficult to challenge in the future.

He says the deal will then go before Brazil's public prosecutor to issue an opinion, before reaching Judge Fernando Viana for confirmation in Rio's 7th Corporate Court. Oi has confirmed the plan will be made public once it is filed before the court.

Savi also tells GRR that the team will seek to enforce the plan in New York and the Netherlands, and reveals that Oi has requested an anti-suit injunction in the Cayman Islands.

The US Bankruptcy Court for the Southern District of New York recognised the Brazilian judicial reorganisation process under Chapter 15 back in July 2016.

In a ruling last month, the New York court upheld that earlier recognition and refused to recognise an insolvency process started in Amsterdam in respect of Oi's Dutch subsidiary and special purpose finance vehicle, Oi Coöperatief (Coöp). The New York court found that Coöp's centre of main interests (COMI) was in Brazil and accused one of its major creditors, Aurelius Capital Management, of trying to "weaponize" the Chapter 15 process to attack Oi's Brazilian plan.

Savi says the anti-suit injuction Oi is seeking in Cayman has been filed against Aurelius' locally-incorporated affiliate, Capricorn Capital. The company wants a court order declaring that the Dutch proceedings are harming its restructuring, and prohibiting the company from pursuing the Dutch process.

Oi's creditors' vote has been delayed time and again by a long-running impasse between its shareholders and some of its creditors known as the "G5".

The steering committees of the telecoms company's International Bondholders Committee and Ad Hoc Group of Bondholders repeatedly maintained throughout the case that Oi's minority shareholders – led by billionaire Nelson Tanure – were using the company's judicial reorganisation process to bolster their own interests at the expense of other stakeholders. They rejected the restructuring plan and along with a group of export credit agencies, facility agents and banks advised by FTI Consulting, offered their own, alternative restructuring plan back in August.

With little progress being made, Judge Viana made a ruling on 29 November putting Oi's new CEO Eurico Teles in charge of negotiating a restructuring plan without the approval of the company's board and shareholders.

Bloomberg reported ahead of the vote that shareholders had filed complaints to Anatel, Brazil's securities regulator CVM, the Rio bankruptcy court, Brazil's attorney general and the public accounts watchdog TCU, claiming the plan is illegal and in breach of Brazil's corporate law.

Anatel said on 6 December it would open an administrative enquiry into Aurelius Capital's Brazilian telecoms holdings, after Société Mondiale – the fund through which Tanure owns his stake in Oi – complained the hedge fund would become a co-controller of Oi under the plan, potentially distorting the Brazilian telecoms market as it also allegedly indirectly owns 17% of rival Nextel.

Counsel to Société Mondiale did not immediately respond to requests for comment on the various complaints filed.

Oi's previous CEO, Marco Schroeder, resigned out of frustration at what he saw as the Brazilian government's slowness to help the company emerge from judicial reorganisation, according to Bloomberg.

 

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 with Joäo Vincente Carvalho, Carolina Iwamoto, Ana Luiza Arguelloand Ana Elisa Laquimia

Jones Day

Partners Corinne Ball in New York and Louis Fischer in Washington, DC

 

Counsel for the International Bondholders' Committee

Sergio Bermudes Advogados

Marcelo Carpenter and Luis Tomas Alves de Andrade

Dechert

Partner Allan Brilliant in New York

 

Counsel to the Ad Hoc Group of bondholders

Pinheiro Neto Advogados

Partner Giuliano Colombo in São Paulo

Cleary Gottlieb Steen & Hamilton LLP

Partners Richard Cooper and Luke Barefoot in New York

 

Counsel to Bratel

Souza, Cescon, Barrieu & Flesch Advogados

Partners Maria Cristina Cescon, Carlos Braga, Tiago Lopes, Carlos Augusto Junquera de Siqueira and Guilherme França, and associates Fernanda Montorfano and Thenard Figueirdo in Rio de Janeiro

Andrade Fichtner Advogados

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

 

Counsel to Societe Mondiale Fundo

Galdinho 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 Yor

Judge Sean Lane

 

Coöp's bankruptcy trustee

Jones Day

Partner Jasper Berkenbosch in Amsterdam

 

Counsel to Coöp's bankruptcy trustee

Jones Day

Partners Corinne Ball and Stephen Pearson, with associates Brian Kotliar and Anna Kordas in New York

 

Counsel to Oi SA

White & Case LLP

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

 

Counsel to the steering committee of the ad hoc group of bondholders

Cleary Gottlieb Steen & Hamilton LLP

Partners Richard Cooper and Luke Barefoot in New York

 

Counsel to the international bondholder committee

Dechert

Partners Allan Brilliant and Benjamin Rosenberg in New York

 

Counsel to export credit agencies

Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados

Partners Alex Hatanaka and Marcelo Ricupero, and associate Liv Machado in São Paulo

Milbank, Tweed, Hadley & McCloy LLP

Partner Nicholas Angel in London

FTI Consulting

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

CMS

Partner Marcel Groenewegen in Amsterdam

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