Bankruptcy risk, collapse in the sector and damage to the economy: what does Americanas say to ask for judicial recovery

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Justice accepted request this afternoon. With that, the company enters a ‘shield period’ and has debts suspended for 180 days so that it can negotiate with creditors. Lojas Americanas unit, in Sorocaba (SP), closed after hours Eduardo Ribeiro Jr./g1 Americanas filed a request for judicial recovery this Thursday (19), accepted by the Court in the late afternoon. The company’s debts amount to R$43 billion, divided among approximately 16,300 creditors. With the application accepted, the company enters a “shielding period” and has debts suspended for 180 days so that it can negotiate with creditors. To base the order, the retailer listed a number of reasons. Among them, he mentions the consolidation of the brand among Brazilians and even the presence in “Big Brother Brasil” as an example of this. To make it clearer, we’ve separated the arguments into four blocks. First, she explains why she made the request with such urgency: Avoid damage to the cash: the text says that the measure is essential to “avoid irreversible damage” to the company’s cash and says that some creditors “have taken measures” that led to the “emptying of the company’s cash” by means of the declaration of early maturity of the debts and, thus, according to the document, “they closed the doors to any friendly negotiation”. Values ​​were not returned: Even with the court decision forcing creditors to return the amounts they obtained from the company due to the material fact, she says that this did not happen. Minimized working capital: The company says that, because the risk rating agencies lowered its rating, the banks “refused to advance credit card receivables”, which, according to it, “drained more than R$ 3 billion from Cashier”. Drop in shares: the document cites the “historic” drop of over 80% of the company’s market value in less than a week. For all this, she alleges that she “found herself with no way out”: if the judicial reorganization did not happen, she would run the risk of going bankrupt. Afterwards, he goes on to contextualize the financial difficulty he is facing: The document says that the group’s operation “has always been healthy”, at least until last week – before, therefore, having revealed the accounting inconsistencies. After that, she says, “applicants saw their cash and revenue expectations crumble in a matter of minutes.” He mentions that the estimate of the value of the inconsistencies is in the order of R$ 20 billion, which could increase the group’s debt to approximately R$ 40 billion. In the same document, the company also mentions that the total value of the company’s debts is R$ 43 billion. In the text, the company stated that it “needs the support and understanding of the Judiciary and creditors to overcome this crisis” and explains that the entire financial collapse took place after revealing the accounting inconsistencies to the market, noting that “it is still too early to specify what happened and who are responsible”. Despite all this, she says that her operation is still viable: According to the document, “the cash flow crisis experienced is momentary, transient and will certainly be overcome”. This is because, according to the company, “the Company’s net revenue, until the 3rd quarter of 2022, was around BRL 27 billion, with adjusted EBITDA of BRL 3.157 billion”. Debts (without inconsistencies) amount to R$ 20.7 billion, of which 89% are long-term. Therefore, according to the document, the value of cash was greater than the value of short-term debt. The group expected to improve performance this year, based on positive results obtained in the third quarter of last year. She mainly cites fintech AME, cashback. Finally, it mentions the impacts that an eventual break could have: Job creation: the document cites Americanas as a “producing source” that generates more than 100,000 direct and indirect jobs. Preservation of shareholders: he also mentions the “need to preserve the interests of almost 150,000 shareholders”. Collapse in the sector: the company says that the break could generate “collapse of the already traditional and consolidated production chain in Brazil” and for “the more than 50 million consumers who use the services provided by the group”. She mentions everything from the price of the Easter egg (and claims that it is “the largest retailer of these products in the world”) to the delivery system in communities in São Paulo and Rio de Janeiro. Sustainability of partners and suppliers: one of the company’s arguments is that “various economic sectors” depend on its operation. She mentions the businessmen and entrepreneurs who use her marketplace and also the suppliers. ALSO READ: UNDERSTAND: What is Judicial Reorganization Failure at Americanas: who lost and who won with losses Americanas: see the chronology of the case, from ‘accounting inconsistencies’ to judicial reorganization From street shop to retail empire: see history of Americanas in country Understand the case Americanas’ accounting scandal began last week, when the company reported that it had discovered “inconsistencies in accounting entries” worth R$ 20 billion. With that, the then president of the company, Sergio Rial, and the director of investor relations, André Covre, decided to leave the company, less than ten days after being sworn in. Since then, the company has seen shares melt on the Brazilian stock exchange, losing more than R$ 8 billion in market value in just two days. See the chronology of events.

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