Brazil's corruption scandal-hit Odebrecht files for bankruptcy
Brazilian conglomerate is vying for bankruptcy protection to restructure $13bn of debt
Brazilian construction company Odebrecht SA has filed for bankruptcy protection in hopes to restructure $13bn of debt following years of being emrboiled in a Latin American political corruption investigation, and has asked the courts to bar its seven largest creditors – including six banks and an investment fund – from possessing or selling shares from its controlling stake in petrochemical company Braskem SA.
According to a report by Reuters, Odebrecht stated that the Braskem stake – pledged as collateral to its creditors – was essential to its restructure, which the group concluded was best supported by bankruptcy protection, as the petrochemicals company was responsible for 80% of the group’s revenue in 2018.
Since the company’s challenges for its involvement in a corruption scandal from 2014, Odebrecht’s former chief executive officer, Marcelo Odebrecht, has been arrested and sentenced to 19 years in jail in 2015, followed by the company agreeing to a corruption leniency fine of $3.5bn with prosecutors in Brazil, the US, and Switzerland.
The group has since reportedly been selling assets to raise cash, and is currently being advised by financial restructuring firm RK Partners and E Munhoz Avagados.