Americanas: see the chronology of the case, from ‘accounting inconsistencies’ to judicial recovery

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The company filed for bankruptcy protection this Thursday, a week after the discovery of a hole in the company’s balance sheets that raised the debt to R$ 43 billion. The value of the hole in Americanas was estimated at R$ 20 billion Reuters Americanas, the Brazilian retail giant, filed for judicial recovery this Thursday (19), at the 4th Corporate Court of Rio de Janeiro. The request, made on an urgent basis, serves to maintain the company’s solvency just eight days after the discovery of an accounting defect of R$ 20 billion in its corporate balance sheets. This morning — after a meltdown of Americanas shares on the stock exchange throughout the week and the beginning of legal disputes with creditors seeking payments — the company announced that it only keeps R$ 800 million in cash, which makes the operation unsustainable . By way of comparison, the figure is significantly lower than the BRL 8.6 billion reported in the third quarter of 2022. The g1 brings together the main episodes of the company’s collapse week below, in chronological order. January 11 Americanas released a Material Fact informing that it had identified “inconsistencies in accounting entries” in corporate balance sheets, in an amount that would reach R$ 20 billion. In other words, Americanas realized that the billionaire value — which refers to the first nine months of 2022 and previous years — had not been properly recorded in the company’s corporate balance sheets. In addition, the text reported that the company’s president, Sergio Rial, left office just 9 days after taking over. The company’s chief financial officer, André Covre, also resigned – he had taken office alongside Rial. The document released by the company did not bring much detail about what was actually found in the accounts, but stated that the accounting area detected “the existence of purchase financing operations in amounts of the same order (R$ 20 billion), in which the company is indebted to financial institutions and which are not adequately reflected in the accounts payable in the financial statements”. January 12 As a result of the revelation made on Wednesday night, investors woke up in an uproar. Major financial institutions put Americanas shares under review, and B3, the São Paulo stock exchange, put the company’s common shares up for auction. Sérgio Rial held a conference on Thursday morning to clarify some points. “The first major conclusion is that we are not talking about a number that is off the balance sheet. It is just that it has not been properly recorded over the last few years,” he said. The ex-president said that the genesis of the problem was in operations with drawn risk. It is a line of credit that makes a triangulation between the company, its suppliers and a financial institution. It works like this: When contracting the withdrawn risk, the company asks its bank to pay for a purchase with the supplier; Thus, the bank pays off the contract on behalf of the company, which becomes a debt to the bank with the collection of interest; From what is known so far, Americanas contracted a drawn risk, but the operations were not duly recorded in the balance sheets; In the case of Americanas, there were numerous hidden operations, underestimating the company’s level of indebtedness. Americanas shares (AMER3) were traded at auction to contain the damage. The auction is a “defense mechanism” that interrupts common negotiations to reassure moments of gross change in stocks on the stock exchange. Even so, at the end of the trading session, the exact drop was 77.33%. A survey by Einar Rivero, from TradeMap, shows that this was the biggest daily drop by a publicly traded company since 2008. From street shop to retail empire: see history of Americanas in the country January 13 A judge from Rio de Janeiro granted on Friday (13), protection for Americanas against early maturity of debts, giving the company breath to face the crisis. It was the beginning of a legal battle with the company’s main creditors. On that day, in response to the request of the group companies, judge Paulo Assed Estefan, of the 4th Corporate Court, stated that “the approval of the measure is fully justifiable, with a view to avoiding the depletion of all the company’s assets by highly qualified creditors, in to the detriment of the other creditors, and, mainly, of the very maintenance of the economic activity”. According to the judge, any changes in the retailer’s balance sheet resulting from the announcement of accounting inconsistencies “may have repercussions on the company’s indebtedness and minimum working capital (…) of the order of 40 billion reais”. The document cites guardianship “preparatory of the judicial recovery process” and gives the period of 30 days for the company to assess whether it will file for recovery. Until then, Americanas’ obligation to pay its debts is suspended. It was also discovered that Americanas executives sold nearly R$212 million in company shares during the second half of last year, according to Reuters calculations based on information released by the company to the market over the period. January 14 Americanas published, on Saturday (14), the full decision on a request for Precautionary Urgency Protection from the 4th Corporate Court of the Judicial District of Rio de Janeiro. In the document, the company states that the correction of accounting inconsistencies, whose value was estimated at around R$ 20 billion, would lead to a review of the financial results of previous years. According to Americanas, the numbers referring to the degree of indebtedness and its working capital will be changed. It was clear that the situation would lead to non-compliance with contracts and the early and immediate maturity of debts. BTG Pactual bank, one of Americanas’ main creditors, appealed in court against the injunction that protected the retailer for 30 days against early maturity of debts. The bank’s lawyers argued that the injunction illegally determines the reversal of a payment made by Americanas to BTG Pactual, in the amount of R$ 1.2 billion. Judge gives Americanas 30 days to assess whether it will file for bankruptcy January 16 Americanas’ shares plummeted again on Monday (16th), with the developments of the injunction to protect against creditors. The retailer’s shares fell 38.41% and ended the trading session quoted at R$ 1.94, a level well below the R$ 12 level seen before the company’s accounting scandals. Genial Investimentos said that all of Americanas’ value points were going “down the drain”. And they highlighted the worsening of financial leverage, higher cost of capital, margin compression and doubts about revenue growth, according to a note to clients. January 17 The former president of Americanas Sergio Rial said on Tuesday that his departure from the company took place after “interviewing remaining executives, questioning and understanding any concerns and new perspectives” of the company’s top management. He sought to dispel rumors that he knew about the accounting fraud. “In these conversations, information and doubts were shared and with the natural depth to understand them and give them directions together with the new CFO, Andre Covre, we arrived at the relevant fact with transparency and reliability! Any speculations or theories other than that are frivolities. I would never compromise with my biography”, wrote Rial, in a social network. “With the conclusion of the initial diagnosis, there was an urgent need to correct the course. And that correction came from the transparency and unconditional support I received from the Board of Directors and the reference shareholders”, says Rial. On the same day, the credit rating agency Moody’s cut Americanas’ credit rating from ‘Ba2’ to ‘Caa3’ and placed it under negative observation. The new rating indicates that the company is at very high credit risk. Analysts Erick Rodrigues and Marcos Schmidt write that the change occurs after the company obtained a precautionary measure to suspend the collection of debts by creditors. Finally, the news that directors and shareholders had sold Americanas shares before the outbreak of the scandal led B3 to provide data to help the Brazilian Securities and Exchange Commission (CVM) determine whether there was use of privileged information (insider trading). “We are passing on information to the CVM to help [a detectar se houve insider trading]”, Finkelsztain told journalists. January 18 The Court of Justice of Rio de Janeiro (TJ-RJ) granted BTG Pactual, on Wednesday (18), the right to block R$ 1.2 billion from Americanas. possibility of blocking served so that the bank could protect itself from an eventual default by Americanas. The endorsement, granted by the judge Flávio Marcelo de Azevedo Horta Fernandes, of the 2nd Criminal Chamber of Rio de Janeiro. Santos Lopes ordered BTG to return the money it had already withdrawn from Americanas to pay off a line of credit, temporarily freezing the payment of the retailer’s debts and reversing any execution attempts by creditor banks. of the debt after the retailer informed the shortcoming of R$ 20 billion. company, “there is a need for diligence” to prevent this measure from being used as a means of defrauding creditors. Pipeline, from the newspaper “Valor Econômico”, anticipated that Americanas had only R$ 800 million in cash and that a judicial recovery would be brought forward. January 19 In a material fact, Americanas confirmed the information from Pipeline. In the statement, the company confirmed the R$ 800 million in cash, which would mean a significant reduction against the R$ 8.6 billion reported in the 3rd quarter of 2022. According to a report by XP Investimentos, the company’s cash is equivalent to about 4 months and a half of personnel expenses. “Americanas informs that, given the unilateral attitude of the creditors, its cash position reached R$ 800 million and a significant portion of this amount has been unjustifiably unavailable for the company’s operations since yesterday”, said the company. “In view of this, Americanas is forced to work with the possibility of, in the next few days or even potentially in the next few hours, approving the urgent filing of its request for judicial recovery”. By “unjustifiably unavailable”, the company attributes the situation to the decision of the Court of Justice of Rio de Janeiro to block BRL 1.2 billion from Americanas, at the request of the BTG Pactual bank. (This article is currently being updated)

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