Aggrieved shareholders of Brazilian telecom carrier Oi have launched appeals against its US$20 billion restructuring plan that was pushed through without their approval.
Latin Lawyer's sister publication GRR can reveal Oi shareholder Bratel filed petitions on 8 February in the Rio de Janeiro Court of Appeals against the ratification of Oi's restructuring plan, and a court decision authorising its CEO Eurico Teles to negotiate the plan without approval of Oi's board or shareholders.
Cescon Barrieu Flesch & Barreto Advogados partners Fábio Rosas and Tiago Lopes are arguing that the two actions went against Brazil's Corporations Law and Bankruptcy Law. Bratel also says the bankruptcy court lacked jurisdiction to decide on matters related to the company's directors and shareholders, which under its bylaws should be subject to arbitration proceedings.
The appeals follow conflict between Oi and the shareholders over a 7 February extraordinary general shareholders' meeting to discuss "certain conditions of the Oi reorganisation plan".
Rosas and Lopes say that during the meeting, shareholders authorised the company to file a lawsuit against Teles and Carlos Brandão, Oi's financial director, for allegedly breaching Brazil's corporate law during the restructuring proceedings. Other matters discussed at the meeting were not decided because of a lack of necessary quorum, they add.
"It is another step and a new chapter of the whole discussion over the reorganisation proceeding and also corporate decisions and deliberations," the lawyers say.
BMA - Barbosa, Müssnich, Aragão partner Sergio Savi, who leads Oi's legal team, said he was unable to comment on the developments.
The same day as the shareholders' meeting, Oi announced that Rio de Janeiro's Seventh Corporate Court had ruled that any decision made at the meeting could not affect the December restructuring plan.
It said the court declared any out-of-court deliberation that undermined matters already approved in its restructuring plan "invalid and ineffective". The plan "remains fully effective and unchanged", Oi added.
The company has attached a copy of the court's decision, dated 25 January, translated into English and attributed to Judge Ricardo Lafayette Campos, to its press release.
However, Rosas and Lopes say the decision on which Oi has based its argument is being challenged in one of their appeals.
Creditors approved Brazil's biggest restructuring plan on 20 December following a 15-hour meeting, held at a former Olympic boxing venue to house the more than 1,000 attendees.
The plan sees bondholders swap debt for about 75% equity, along with an injection of 4 billion Brazilian reais (US$1.216 billion) in capital.
Oi told creditors on 2 February it would not hold an extraordinary general shareholders meeting because "the agenda contained in the notice circulated by one of Oi's shareholders is contrary to the judicial decision rendered on 8 January 2018".
"The convening of a shareholders' meeting would reinstall the instability strongly rejected by the judiciary throughout this judicial recovery process," Oi said.
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
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
Partner Eduardo Munhoz with Joäo Vincente Carvalho, Carolina Iwamoto, Ana Luiza Arguelloand Ana Elisa Laquimia
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 (Pharol)
Cescon, Barrieu, Flesch & Barreto Advogados
Partners Maria Cristina Cescon, Fábio Rosas and Tiago Lopes, with associates Guilherme França, Fernanda Montorfano, Thenard Figueiredo and Juliana Vasquez
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
Galdino, Coelho, Mendes, Advogados
Partners Joao Mendes, Rafael Pimenta and Lia Stephanie Saldanha Pompili in Rio de Janeiro