SAO PAULO (Reuters) – The Brazilian government is considering changes to the country’s bankruptcy protection law to facilitate an intervention in Oi SA, whose in-court reorganization process is suffering with internal shareholder and creditor disputes, two local newspapers reported on Monday.
According to daily newspapers Valor Econômico and Folha de S. Paulo, government officials are considering the possibility of implementing changes to law via an executive decree. Apart from speeding up an intervention in Oi, the move would revamp the way the government oversees carriers, which operate under two types of license, the papers said.
Folha said President Michel Temer’s administration confirmed that officials are working on a draft decree that would aim at altering some aspects of the bankruptcy protection law, but that it would only be used as a “last resort” measure. Usually Congress has 180 days to discuss and approve an executive decree before expiration.
According to Folha, which did not say how it obtained the information, a government intervention in the debt-laden carrier would remove Oi’s current management and board of directors, while keeping a committee of financial comptrollers. Industry watchdog Anatel would initially intervene Oi for a year, with the possibility of extending it up to three, the paper added.
The news comes as speculation mounts that the Temer administration is concerned about delays and disputes in the Oi plan. Last month, several government officials acknowledged that an intervention of Oi was possible, although it did not involve any bailout.
Calls to several press representatives for Rio de Janeiro-based Oi, which filed for bankruptcy protection in June after talks to restructure 65.4 billion reais ($20 billion) in debt collapsed, for comment were not immediately answered. The presidential palace did immediately comment on both stories.
Asked by Valor whether Oi was aware of the intervention plan, Chief Executive Officer Marco Schroeder said he acknowledges closer state monitoring of the situation but said an intervention is “unnecessary.”
The restructuring plan that Oi presented to creditors on Sept. 5 failed to garner support from key state creditors and Anatel, which altogether are owed almost 30 billion reais by the company, Folha said, without citing sources for the information.
(Reporting by Guillermo Parra-Bernal and Bruno Federowski, editing by Louise Heavens)