By: Vitor Ferrari and Ivan Kubala

Targeted by the Lava Jato operation and forced to sign a leniency agreement with the Union in which it undertakes to return approximately R$1.50 billion, the famous construction company Andrade Gutierrez, through its business group, filed a request for extrajudicial recovery in the approximate amount of R$2.36 billion in the 1st Business Court of the District of Belo Horizonte.

The trigger that forced the group's companies to resort to such measures was the fact that they failed to honor payments to creditors who held their debt securities on the international market. These debts are denominated in dollars, and with the currency's rise in value compared to the real's devaluation, coupled with the major political and economic crisis in Brazil, which drastically reduced investments in infrastructure and construction, their costs increased significantly, while the company began to make less and less profit.

Another important factor that certainly affected the company's activities was the fact that it was involved in corruption scandals investigated by Operation Lava Jato. As a result, the company's credibility was diminished both nationally and internationally, in addition to dealing it a severe economic blow, as it was forced to return R$1.5 billion to the public coffers.

The debt amounts come from the issuance of debt securities by AG Internacional, a company belonging to the group, in the amount of US$1.4 billion, which would mature in 2018. However, as already mentioned, Andrade Gutierrez was unable to fulfill its obligations to the international creditors holding its securities.

Unable to pay its creditors, AG Internacional decided to offer new bonds worth US$1,400,000 to replace the old ones. In order for them to accept the proposal, the company was forced to provide several guarantees, especially from the other companies that belonged to the group.

The attempt at an out-of-court recovery is due to the lack of credit with banks, which makes it impossible for the company to obtain loans. Now, with the request made to the court, Andrade Gutierrez states that the plan proposed to the creditors is in accordance with the parameters of Law 11.101/05 (Bankruptcy and Judicial Recovery Law), and has already been supported by more than half of the creditors.

With the request, the company seeks, among other benefits, to bind all its creditors to the proposed plan, which provides for bonds maturing until 2024.

With the collaboration of Luis Felipe Simão