Shares of Oi traded on the Brazilian Stock Exchange (B3) recorded a sharp decline on Monday (10/11), after the operator admitted to the court that it may enter a state of insolvency, amid difficulties in meeting its obligations.
At noon (Brasilia time), the company’s common shares fell by 14.29%, at a price of R$0.24. Preferred shares fell 10.3% to R$4.18.
According to a document submitted by Oi, in a joint petition with its judicial director, to the 7th Business Court of Rio, the operator may not be able to support the payment of all its additional liabilities related to the bankruptcy and comply with the applicable judicial recovery plan.
In practice, the company admitted to the court that it may not be able to leverage measures to maximize its cash flows. Non-agreement debts are debts that occur outside the judicial recovery process.
If the court orders the judicial liquidation of Oi, the company’s judicial director (Bruno Rezende) requests permission for the operator to continue its operations on a temporary basis, to ensure the full implementation of all ongoing services.
In September, the court ordered the dismissal of Oi’s previous management and the preparation of a transition plan to ensure continuity of services provided by the operator. An interventionist was also appointed to deal with the case.
Judge Simone Gastesi Schifrand, of the 7th Business Court of Rio de Janeiro, also stayed the charges against Oy, with the aim of preserving the company’s cash flow.
Judicial recovery
In March 2023, Aoi entered judicial recovery for the second time. The application submitted to the Seventh Business Court of Rio de Janeiro was accepted by Judge Fernando César Ferreira Viana, three months after the conclusion of the first process.
In its new judicial recovery, Oi reported debts of R$43.7 billion, of which R$1 billion refers to business debts.
Aoi entered the judicial recovery phase for the first time in 2016, with accumulated debts of R$65 billion. The operation was closed only in December 2022, after six years.
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