Americanas SA, the distressed Brazilian retailer, can begin settling debts with small creditors, a judge has ruled, in a blow to larger firms that sought to halt the payments.
(Bloomberg) — Americanas SA, the distressed Brazilian retailer, can begin settling debts with small creditors, a judge has ruled, in a blow to larger firms that sought to halt the payments.
The company plans to pay around 192 million reais ($37 million) to class I and class IV creditors in the short term with part of the funds obtained from top shareholders, according to a filing seen by Bloomberg. The move won’t affect company cash flow, according to Tuesday’s ruling by Judge Paulo Assed Estefan in Rio de Janeiro.
“It will reduce the degenerative impact on its small suppliers, who continue to contribute to economic activity, supplying products that make up its production line, as well as meeting the needs of workers, many of whom are in extremely vulnerable situations,” the judge wrote.
Creditors including Banco Bradesco SA and Banco Safra SA sought to block the payments. Estefan ruled that the move won’t hurt unsecured creditors because it involves only a small portion of Americanas’s total debt of 42.5 billion reais, and because the retailer had provisioned the expected costs earlier.
Americanas filed for bankruptcy protection on Jan. 19 after revelations of “accounting inconsistencies” of 20 billion reais that artificially boosted profits for as long as a decade, and reduced reported liabilities by half. The company owes more than 9,000 companies and individuals, an updated creditor list shows.
Americanas didn’t reply an email seeking comment.
The firm’s biggest shareholders, billionaires Jorge Paulo Lemann, Marcel Telles and Carlos Sicupira, are pleased with the decision because it will bring relief to individuals and small suppliers, according to a spokesperson. “Hopefully, this will be recognized as an important further step in finding constructive solutions to the complex Americanas case,” the spokesperson said.
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