The Brazilian construction conglomerate, Odebrecht (ODB), which has admitted to paying out about US$7.88 billion in bribes over the past 20 years to win public contracts in Latin American countries, requested to file for bankruptcy protection Monday before a Sao Paulo court. The measure would allow the corporation to negotiate "recovery plan" with its creditors with the hope to avoid a shutting its doors.
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Given the "expiration of various debts, occurrence of unpredictable events and recent attacks on the company's assets", the request for bankruptcy protection became "the most appropriate measure" to enable the company to continue operating in a "coordinated, secure, transparent and organized manner," ODB said in an official statement.
Odebrecht hopes the judicial move will allow it to renegotiate about US$21 billion in debts, according to DW, with both foreign bonds holders and local banks such as the National Development Bank (BNDES), the Bank of Brazil and Caixa Economica Federal (CEF). Reuters puts ODB debts at US$13 billion.
The Brazilian court said it accepted the request for financial restructuring because of the nation's "economic crisis" and to avoid greater "impact on (the company's) reputation due to errors made." Brazil has a 25 percent unemployment rate.
The court also ruled in favor of bankrupty so that Odebrecht and its subsidiaries can continue to "receive new loans and have their services contracted."
The ODB group said in a statement its subsidiary and Odebrecht itself will continue to operate "normally," working to "optimize its liquidity and normalize its capital structure."
Since major investigations of Odebrecht began in 2014, the company has agreed to pay out billions in compensations to the governments of the United States, Brazil, Peru, Panama, the Dominican Republic, Guatemala, Ecuador and Switzerland for its major wrongdoings and corruption in each country.
This is the largest bankruptcy petition in the history of Brazil. In 2016, the telephone company Oi filed for bankruptcy after failing to pay out about US16.6 billion in debts.
Some companies owned by the ODB group, including its petrochemical company, Braskem, along with Ocyan, Odebrecht Transport and Atvos Agroindustrial, Brazil's second-largest ethanol producer, already applied for bankruptcy in May.
Monday's bankruptcy filing excludes some ODB subsidiaries in Latin America.
The Brazilian multinational holding was founded in 1944. Its most current CEO, Marcelo Odebrecht, once one of Latin America's most influential business leaders, was sentenced to 19 years in prison for his role in several major corruptions scandals. He's now serving a reduced sentence at his Sao Paulo mansion.
According to the U.S. Justice Department, Odebrecht paid out US$7.88 billion in bribes across 12 countries. Three former Peruvian presidents are under investigation or have been charged in accepting bribes from Odebrecht officials during their electoral terms. The construction company admitted to paying at least US$29 million in bribes to Peruvian officials since 2004.