Judicial recovery of Jari Celulose should be transformed into bankruptcy – News of Brazil
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The judicial administrator of the Judicial Recovery of Jari Celulose requested its transformation into bankruptcy. The information comes from Pará journalist Mauro Bonna, who writes a column in the Diário do Pará newspaper.
According to him, the judicial administrator claimed the inability to recover the factory, which had been closed for more than 17 months, and the delay of more than ten months of wages, although the company had raised substantial financial resources, through financing obtained through equity guarantee.
At a first general meeting, last year, nothing was decided by the creditors on whether or not to approve the recovery plan proposed by Jari, the decision was only postponed. The bankruptcy request, filed in December 2023, is up for decision by the Monte Dourado District judge.
In November last year, the Jari Celulose factory, in Monte Dourado, without manufacturing activity for more than 15 months, reported that it had been unable to resume its production capacity, without money for fuel oil and payment of late wages. Jari already claimed that it was in the process of closing the sale of federal tax credits, enough money to reestablish production activity and pay salaries. A general meeting of creditors is scheduled for next February, but Jari will hardly be able to approve its judicial recovery plan, heading towards bankruptcy.
Prolonged crisis
In July 2019, the Pará Court accepted the request for judicial recovery from companies in the Jari group, which, among other activities, produces dissolving cellulose in the Jari Valley, an Amazon region between the states of Pará and Amapá, and is controlled by businessman Sérgio Loving. The total debt subject to the process was R$1.75 billion. The intention was to present the recovery plan within the 60 days provided by law.
In the approval, which is dated July 16, judge Rafaella Moreira Lima Kurashima, from the District of Almeirim and the district of Monte Dourado, recognized the group’s argument that a series of events harmed the expansion of business in recent years, including the “bad choice” of service providers. Jari Celulose had problems converting the short fiber pulp mill to dissolving pulp a few years ago, which led to the operation being stopped for a long period.
In the middle of last year, the financial situation worsened and pressure from creditors ended up being reflected in the activity of the group’s companies. Given this, the banks BTG Pactual and Bradesco were mandated by Jari Celulose to find a partner for the company. At that time, there was no limit defined for the slice that would be sold to the future partner.
In April this year, Jari’s accounts ended up blocked by Banco do Brasil, leading it to stop part of its production. The group’s companies that entered into judicial recovery employ around 700 direct workers and two thousand indirect workers.
With the aim of focusing on the cellulose business, Jari began selling its corrugated cardboard packaging business in the country in 2012 to the American company International Paper (IP), which is now looking for a strategic option for these assets and will leave this segment in the Brazilian market. In two purchase stages, between 2012 and 2014, IP disbursed R$1.27 billion.
At that time, Jari was already investing in the conversion of the factory in the North of the country to produce dissolving cellulose, used as raw material in the textile industry. At the time, the group’s owner reported that investments were around R$600 million, including the planting of forests, of which R$350 million was financed by the National Bank for Economic and Social Development (BNDES). The “new” Jari would have an initial production capacity of 250 thousand tons per year.
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