Americanas manages to extend protection against collections from creditors

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Justice extended the period for another 180 days, informed the retailer this Tuesday (11). With the decision, actions and executions against the group remain suspended. Lojas Americanas façade Disclosure The 4th Business Court of Rio de Janeiro granted an application by Americanas and extended for another 180 days the company’s protection period against collections from creditors, the retailer informed in a material fact this Tuesday (11). With the decision, “all existing actions and executions against the group” remain suspended, as well as the “enforceability of bankruptcy credits”, said the company. The additional term is counted from the end of the “stay period” — period of protection for a company undergoing judicial recovery. Americanas’ “shielding period”, which has now been extended, began to take effect on January 19 of this year, the date on which the retailer’s request for recovery was accepted by the Court. Remember the Americanas case Balance sheet with ‘inconsistencies’ On January 11, Americanas released a statement that it had identified “inconsistencies in accounting entries” in corporate balance sheets, in an amount that would reach R$ 20 billion. The gap, mainly caused by debts with banks in operations with drawn risk, increased the level of indebtedness and reduced working capital. In summary, the operations were not properly launched, underestimating the company’s debt. As a result, Americanas shares began to fall. Major financial institutions put the shares under review, and B3, the São Paulo stock exchange, put the company’s common (voting) shares up for auction. The auction is a “defense mechanism” that interrupts common negotiations to reassure moments of great variation in the stock market. Still, the shares dropped nearly 80% – the biggest drop by a company on the Brazilian stock exchange since 2008. Battle with banks and other creditors The threat of default sparked a legal battle between the company and major creditors. Americanas obtained protection against early maturity of debts. The ruling informing the retailer of protection also gave it 30 days to assess whether to file for recovery. However, when the company released the entirety of the decision on a request for Precautionary Urgency Protection, it was seen that the company’s debt level was higher than what had been disclosed – more than RS 40 billion, compared to R$ 20 billion that had been previously disclosed. This made the creditors revolt even more. The BTG Pactual bank, one of Americanas’ main creditors, appealed in court against the injunction – which even asked for the reversal of a payment of BRL 1.2 billion made by Americanas to BTG. From then on, risk rating agencies downgraded the company’s rating and the shares fell even further. Request for judicial recovery On the afternoon of January 19, the company filed for judicial recovery, claiming to have limited cash resources to continue operating without the measure. According to the financial director of Spot Finance, Marcello Marin, the request for judicial recovery became the fourth largest in the country’s history, behind only Odebrecht, Oi and Samarco. Judicial recovery serves to prevent a company in financial difficulty from closing its doors. It is a process by which the indebted company gets a deadline to continue operating while negotiating with its creditors, under the mediation of Justice. Debts are frozen for 180 days and the operation is maintained.

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