Creditor Pressure Leads to Suspension of Oi’s Bankruptcy and Return to Judicial Reorganization

The decision was made by Justice Mônica Maria Costa, from the First Private Law Chamber of the Court of Justice of the State of Rio de Janeiro (TJ-RJ). The company returns to judicial reorganization. According to Itaú, one of the company’s largest creditors, Oi failed to comply with part of the plan by not being able to sell some important assets known as Isolated Productive Units (UPIs), which were supposed to generate money to pay debts. Itaú argued that declaring bankruptcy now would cause ‘potentially more serious damages not only to creditors, but also to public interest,’ as the company still provides essential services. The judge agreed that there were sufficient reasons to suspend the bankruptcy, stating there is ‘likelihood in the allegations’ made by the bank and a risk of greater harm if the bankruptcy was maintained. Maintaining judicial reorganization allows for an ‘organized and planned sale of assets,’ avoiding value loss and increasing the chances of payment to creditors. The decision also returns the responsibilities of monitoring the plan’s execution and the company’s reorganization to the judicial administrators, represented by Bruno Rezende from the firm Wald Administração de Falências e Preserva-Ação.