© Reuters. FILE PHOTO: The corporate logo of the Odebrecht SA construction conglomerate is pictured at its headquarters in Sao Paulo

SAO PAULO (Reuters) – A Brazilian judge on Tuesday granted bankruptcy protection to engineering group Odebrecht, beginning the process of restructuring 51 billion reais ($13 billion) of debt.

Odebrecht, which was laid low by a corruption investigation that has rippled across Latin America, filed for bankruptcy protection on Monday, kicking off one of Latin America’s largest, in-court debt restructurings.

Sao Paulo bankruptcy court Judge João de Oliveira Rodrigues named restructuring firm Alvarez & Marsal as the court administrator for Odebrecht and gave the company 60 days to present a restructuring plan for approval by creditors.

Rodrigues said in his decision that creditors are not allowed to sell shares in three subsidiaries, which are pledged as collateral. Odebrecht had requested the measure on Monday, arguing that its stakes in petrochemical company Braskem SA, offshore drilling firm Ocyan SA and ethanol unit Atvos are essential for the group’s restructuring.

Braskem shares rose nearly 4% in Tuesday trading.

Among Odebrecht’s largest creditors are six banks and an investment fund, totaling 33 billion reais in debts owed to Banco Bradesco SA, Itau Unibanco Holding SA and Banco Santander (MC:) Brasil SA and to state-controlled banks Banco do Brasil SA, Caixa Economica Federal and BNDES.

Odebrecht said 14.5 billion reais of its bank debts are linked to shares as collateral, so are not subject to the in-court restructuring.

State-controlled banks are the most exposed to Odebrecht, as they lent the most without collateral. Development bank BNDES is the group’s largest individual creditor, with 7 billion reais in unsecured debts, plus 3 billion reais in debts with collateral.

(Reporting Alberto Alerigi; writing and additional reporting by Carolina Mandl; editing by Brad Haynes and Lisa Shumaker)

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2019-06-18