Livraria Cultura has been declared bankrupt – 09/02/2023 – Market

Judge Ralpho Waldo De Barros Monteiro Filho, of the 2nd Bankruptcy and Judicial Recovery Court of São Paulo, decided this Thursday (9) for the bankruptcy of Livraria Cultura.

High production costs, drop in demand for books, lack of interest in reading and the deep economic crisis that Brazil has been going through since mid-2014 were pointed out by the bookshop’s management as the main reasons for the financial collapse.

In this Thursday’s sentence, Monteiro Filho states that despite recognizing the importance of Livraria Cultura, the group was unable to overcome its economic crisis. According to the judge, the court-supervised reorganization plan had been breached and the provision of information in the process had been incomplete.

“The role of Livraria Cultura is notorious,” he wrote. “And not just for the economy, but for people, for society, for the community of not just readers, but consumers in general.”

“It is with a certain sadness that it is recognized, in the legal field, that the group has not been successful in overcoming its crisis”, said the judge.

In São Paulo, the bookstore is installed in Conjunto Nacional, a mixed-use condominium between Avenida Paulista, Alameda Santos, Rua Augusta and Rua Padre João Manuel. There is a second unit in Porto Alegre (RS).

Livraria Cultura was already at risk of having the judicial recovery turned into bankruptcy since 2020, when creditors rejected the final version of the plan in which the company demonstrated how it would pay off debts and become solvent again. At the time, the company managed to maintain the plan thanks to a decision by the São Paulo Court of Justice.

According to the judge of the 2nd Bankruptcy and Judicial Recovery Court, labor claims that should have been fully paid by June 2021 were still open. The monthly activity reports, which are made by the judicial administrators, were hampered by the failure to send documents and the lack of payment of fees that should have been fully paid in April 2021.

Judge Ralpho Monteiro Filho also cites, in this Thursday’s decision, that the trustee appointed in the court-supervised reorganization reported evidence of fraud in financial transactions carried out by the company’s partners. Creditors also reported that the group was still in default.

“The recovery was designed to help only debtors who really demonstrate conditions to recover, since its processing should only support viable debtors”, wrote the judge.

When it filed for bankruptcy protection, Livraria Cultura declared it had BRL 285.4 million in debt.

In the bankruptcy decision, the judge determined that, within the next 48 hours, the assets, documents and books, as well as the valuation of these assets, should be identified. Financial assets and accounts in the name of the bookstore and 3H Participações (the holding company that controlled the company) must be blocked.

Alvarez & Marsal, the trustee who had handled the case until then, asked to leave him. Now, the bankruptcy process will be handled by Laspro Consultores (the same one that manages the recovery of the Maksoud group).