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Brazilian court approves Oi restructuring plan

Por: Latin LawyerImprimirVisualizar em PDF

The Rio de Janeiro court supervising the high-profile restructuring of Brazilian telecoms group Oi has approved a US$20 billion restructuring plan that was agreed by creditors on 20 December.

Judge Fernando Viana, of the 7th Corporate Court of Rio de Janeiro, rubber-stamped the plan on 8 January, and labelled a proposed shareholders' meeting organised by Luxemburg-registered holding company Bratel – a subsidiary of Oi's largest shareholder – as "absolutely unnecessary".

Portuguese telecoms outfit Pharol, which controls all of Bratel's shares, holds 22.24% of Oi's total share capital. Before Judge Viana made his ruling, Pharol released a statement in which it alleged the restructuring plan "violates the shareholders' rights" and does not comply with governance rules in Oi's bylaws.

Pharol said it had organised a shareholders' meeting to take place on 7 February.

The approved plan will see Oi raise 4 billion Brazilian reais (US$1.22 billion) in capital, and allow bondholders to exchange their debt for about 75% of the equity in the restructured company.

Pharol said the plan gives "undue privileges to a limited group of creditors that would receive billionaire fees" and Oi's securities, without proportional compensation being paid to Oi.

Echoing the complaints raised by Brazil's telecoms regulator, Anatel, at the creditors' meeting on 19 and 20 December, Pharol said the failure to afford Oi appropriate compensation will prejudice the company and its shareholders.

Pharol also alleged that the plan provided for the "improper" removal of Oi board members, among other contradictions of the company's bylaws. The planned capital increase transactions would also cause an "unjustified" dilution of creditors' shareholdings, Pharol argued, as the issue price does not properly reflect Oi's market value.

Dismissing these concerns, Judge Viana said the approved restructuring plan includes amendments to Oi's bylaws, which preclude the proposed shareholders' meeting.

"The clause of the plan that concerns governance during the transition phase is in line with Article 50 of the Brazilian Reorganisation and Bankruptcy Law, and does not violate the Brazilian Corporations Law," Judge Viana said.

"[T]he convening of an extraordinary general shareholders meeting is absolutely unnecessary to give effect to the sovereign debt decision of the creditors," Judge Viana continued. "On the contrary, in this case, the convening of a shareholders' meeting would reinstall the instability strongly rejected by the judiciary throughout this judicial recovery process," the judge added.

It is understood that Oi's counsel, Rio firm BMA - Barbosa, Müssnich, Aragão, will now seek to enforce the plan in New York and the Netherlands.

Speaking to Latin Lawyer's sister publication GRR after the creditor vote in December, Barbosa partner Sergio Savi said the company is also seeking an anti-suit injunction against Cayman-incorporated Capricorn Capital.

Capricorn Capital is an affiliate of Aurelius Capital Management, one of Oi's major creditors, which was accused of weaponising the US Chapter 15 process by a New York bankruptcy court in December.

In a 4 December decision, the New York court refused to recognise a Dutch insolvency action launched by Oi special purpose vehicle Oi Coöperatief as "foreign main proceedings", as the centre of main interest of the company was in Brazil.

Accusing Aurelius of pursuing a strategy to effectively gain a double recovery against Oi's assets, Judge Sean Lane said in his ruling that a "reasonable creditor would have looked to Brazil for their recovery".

Savi told that Oi is seeking an order from the Cayman court prohibiting Capricorn from pursuing the Dutch process, and declaring the Dutch proceedings as harmful to the company's restructuring.

Counsel to Bratel, Fábio Rosas of Souza, Cescon, Barrieu & Flesch Advogados, did not respond to request for comments.

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 Arguelloand Ana Elisa Laquimia in São Paulo


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



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 Figueiredo 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


Counsel to Solus Alternative Asset Management LP

Davis Polk & Wardwell LLP

Partner Timothy Graulich and associates Aryeh Ethan Falk, David Schiff and Erin Walsh in New York; partner Stephen Salmon and associate Bryan Quinn in Menlo Park; and associate Sarah Levin in London


Stocche Forbes Advogados

Partners Paulo Padis and Fabiano Milani, and associates Guilherme Coelho, Rafael Andrade and Teo Galvão in São Paulo


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


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


Partner Marcel Groenewegen in Amsterdam

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