After almost ten years of judicial recovery, the 7th Business Court of the Court of Justice of Rio de Janeiro (TJ-RJ) declared this Monday (10) the bankruptcy of Grupo Oi. The decision was handed down by judge Simone Gastesi Chevrand, who pointed out the telecommunications company’s technical and financial insolvency.
According to the judge, the company accumulates debts of approximately R$1.7 billion and has monthly revenue of around R$200 million, with assets considered “empty”. In the decision, the judge stated that “Oi is technically bankrupt” and that it is no longer economically viable to fulfill its obligations.
The sentence determines the conversion of the judicial recovery process into bankruptcy and the orderly liquidation of the company’s assets, with the aim of maximizing the amounts allocated to paying creditors.
Oi’s activities will continue provisionally until services are taken over by other companies, to ensure continuity of connectivity and maintenance of essential services.
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Settlement process
The company’s operation will be conducted by the Preserva-Ação office, which already acted as the group’s judicial administrator and intervenor. The other two administrators – the Wald and K2 offices – were dismissed.
The bankruptcy also covers the subsidiaries Portugal Telecom International Finance (PTIF) and Oi Brasil Holdings Coöperatief UA All legal actions and executions against the company have been suspended, and creditors must call a meeting to form a committee that will monitor the liquidation process.
According to the TJ-RJ, the decision was taken after a statement from the company itself and the judicial intervener, who reported the impossibility of paying the debts and the non-compliance with parts of the recovery plan. The judge highlighted that “there is not the slightest possibility of balancing the company’s assets and liabilities”.
Oi had recently requested changes to its recovery plan and tried to open a similar process in the United States, without success. The request, however, was not considered by the Brazilian courts.
Cash block
The judge also ordered the blocking of the restricted cash of V.tal, a telecommunications infrastructure company controlled by BTG Pactual and a partner of Oi. According to the decision, the resources allocated to V.tal significantly compromised the operator’s cash flow.
The order also provides for the unavailability of amounts arising from the sale of assets, such as fiber optic and mobile telephony operations, until the judicial administrator presents a detailed report on the assets.
In her decision, the judge criticized the company’s management over the years and mentioned the “systemic liquidation promoted throughout the recovery process, which practically completely emptied it”.
The Court and the Public Ministry also pointed out the federal government’s omission in handling the operator’s crisis, classifying it as “historic and ongoing”.
History
The company entered into judicial recovery for the first time in 2016, with R$65 billion in debt, in the midst of a serious liquidity crisis. The plan was completed in 2022but the company returned to ask for judicial protection at the beginning of 2023, with liabilities exceeding R$44 billion.
“The process began in Europe, when the company Telefônica [espanhola] purchased Portugal Telecom’s share from Vivo in 2010. So that Portugal Telecom would not leave Brazil, the government authorized the company’s entry into Oi. The problem is that Banco Espírito Santo [instituição financeira portuguesa]one of Oi’s main controllers, went bankrupt in 2014, harming one of Brazil’s main telecommunications companies”, explained in 2023 Professor Emeritus of the Faculty of Communication at the University of Brasília (UnB) Murilo César Ramos.
Oi, which was once one of the largest telecommunications companies in the country, came to concentrate a significant part of public telephone and connectivity services, including contracts with security, defense and federal administration bodies.
Today, it is the only operator present in around 7 thousand Brazilian locations, in addition to being responsible for the operation of emergency services such as numbers 190 (police), 192 (Samu) and 193 (firefighters).
In recent years, the company sold its main assets, including its mobile operation, acquired by Claro, TIM and Vivo, and its fiber optic network, transferred to V.tal. According to the court decision, the company’s positive results did not come from operational activity, but from the “alienation of assets and contracting of loans”.
With the bankruptcy declared, the Court seeks to ensure the continuity of services and the preservation of part of the company’s remaining value, ending the cycle of the former “national supertele”.
