Odebrecht makes Chapter 15 filing, presents plan to Brazilian court

By Caroline Salls

Pittsburgh, Aug. 27 – Odebrecht SA made a Chapter 15 bankruptcy filing Monday in the U.S. Bankruptcy Court for the Southern District of New York to gain U.S. court recognition of its reorganization proceedings pending before the 1st Court of Bankruptcies and Reorganizations of the City of Sao Paulo, Brazil.

Odebrecht, its parent companies and some subsidiaries jointly filed a petition for court-supervised reorganization in the Brazilian court on June 17.

The company announced on Monday that it has submitted its reorganization plan to the Brazilian court.

Odebrecht said the plan “enables the generation of wealth in the short, medium and long term, primarily through the divestment of strategic assets and the recovery of the businesses of the Odebrecht Group.”

According to a company news release, the proposal submitted by Odebrecht to the courts confers to creditors payment securities based on the future results of the group’s companies. As a result, Odebrecht said the better the results and cash flow the companies see, the greater the amount of funds to be transferred to creditors.

“We are confident that we are advancing rapidly and satisfactorily in our ongoing dialogue with creditors and in the collective construction of a reorganization proposal,” chief executive officer Luciano Guidolin said in the release.

“The deleveraging resulting from the agreement, the technical excellence of our projects and businesses and the transformation that already has occurred in how we operate our businesses, which are all committed to acting ethically, with integrity and transparency, will guarantee our continued production, protect jobs and create value for all the stakeholders participating in the recovery of a major Brazilian company.”

Guidolin said in a letter to Odebrecht team members included with the release that “the plan is just the starting point of negotiations that will culminate, over several months, in the holding of a general meeting of creditors. Then, once an agreement is reached with the creditors, it will be ratified by the courts.”

The CEO said payments should be made within a maximum of 12 months from the date the court ratifies the plan.

According to documents filed in the Chapter 15 case, the group was liable for $16.88 billion in total debt when it filed its judicial reorganization proceedings.

Cleary Gottlieb Steen & Hamilton LLP is representing Odebrecht in the Chapter 15 case.

Odebrecht is a construction engineering company based in Rio de Janeiro. The Chapter 15 case number is 19-12731.

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