Odebrecht Engenharia gets U.S. court recognition of Brazilian proceedings

By Sarah Lizee

Olympia, Wash., Dec. 31 – Odebrecht Engenharia e Construcao SA gained recognition from the U.S. Bankruptcy Court for the Southern District of New York of its extrajudicial reorganization proceedings in the Brazilian court, according to an order filed Wednesday.

As previously reported, the company filed Chapter 15 bankruptcy in the U.S. court on Nov. 24.

Following the Brazilian recession, the group lost roughly $11.2 billion in canceled contracts and faced significant challenges in obtaining new projects due to lower demand for infrastructure projects in countries where the group operates, foreign representative Adriana Henry Meirelles said in a declaration.

Despite attempts to normalize and continue operating the business in the ordinary course, the group did not have the necessary liquidity to meet all its short- and medium-term financial obligations. Specifically, the debtors and Odebrecht Finance Ltd. have been unable to make interest payments on their existing notes since October 2018 and are not able to meet present and future payments.

In June, the group finalized the terms of an agreed plan of reorganization to restructure the existing notes.

Having received support from 73% of the aggregate claims relating to the existing notes, on Aug. 19, the debtors jointly filed petitions for the commencement of the Brazilian proceedings.

The debtors solicited support for the Brazilian reorganization plan of holders of at least three-fifths of the outstanding amount of all claims subject to the restructuring before commencing the Brazilian proceedings.

At the beginning of the Brazilian proceedings, the debtors’ consolidated capital structure included debt in the aggregate amount of $3.4 billion consisting of seven series of unsecured notes. The reorganization plan provides that the existing notes will be exchanged for new unsecured notes.

On Oct. 26, the Brazilian court issued an order confirming the reorganization plan.

“The Brazilian [extrajudicial reorganization] proceeding, much like a pre-packaged case under U.S. Bankruptcy Law, allows for an expeditious and cost-effective reorganization process that will maximize the going concern value of the OEC group,” Meirelles said.

Odebrecht Engenharia e Construcao is a construction company based in Sao Paulo. The company filed Chapter 15 bankruptcy under case number 20-12741.

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