Odebrecht Engenharia seeks closure of Chapter 15 bankruptcy case

By Sarah Lizee

Olympia, Wash., April 11 – Odebrecht Engenharia e Construcao SA’s foreign representative, Adriana Henry Meirelles, asked the U.S. Bankruptcy Court for the Southern District of New York to close the company’s Chapter 15 case, according to a final report and motion filed Monday.

As previously reported, the company had filed Chapter 15 in the U.S. court to obtain recognition of its extrajudicial reorganization proceedings in the Brazilian court.

Meirelles said Monday that following the completion of the Brazilian proceedings, there is no longer a reason for the Chapter 15 case to remain open.

Background

Following the Brazilian recession, the group lost roughly $11.2 billion in canceled contracts and faced significant challenges in obtaining new projects due to lower demand for infrastructure projects in countries where the group operates, Meirelles had said.

Despite attempts to normalize and continue operating the business in the ordinary course, the group did not have the necessary liquidity to meet all its short- and medium-term financial obligations. Specifically, the debtors and Odebrecht Finance Ltd. have been unable to make interest payments on their existing notes since October 2018 and are not able to meet present and future payments.

In June 2020, the group finalized the terms of an agreed plan of reorganization to restructure the existing notes.

Having received support from 73% of the aggregate claims relating to the existing notes, on Aug. 19, 2020, the debtors jointly filed petitions for the commencement of the Brazilian proceedings.

The debtors solicited support for the Brazilian reorganization plan of holders of at least three-fifths of the outstanding amount of all claims subject to the restructuring before commencing the Brazilian proceedings.

At the beginning of the Brazilian proceedings, the debtors’ consolidated capital structure included debt in the aggregate amount of $3.4 billion consisting of seven series of unsecured notes. The reorganization plan provided that the existing notes would be exchanged for new unsecured notes.

On Oct. 26, 2020, the Brazilian court issued an order confirming the reorganization plan.

“The Brazilian [extrajudicial reorganization] proceeding, much like a pre-packaged case under U.S. Bankruptcy Law, allows for an expeditious and cost-effective reorganization process that will maximize the going concern value of the OEC group,” Meirelles had said.

Odebrecht Engenharia e Construcao is a construction company based in Sao Paulo. The company filed Chapter 15 bankruptcy on Nov. 24, 2020 under case number 20-12741.

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