By: Vitor Ferrari and Ivan Kubala

After a thorough accounting analysis of Lojas Americanas' economic indicators, the team of the company's new CEO, Sérgio Rial, found a fiscal deficit of approximately R$40 billion, a value much higher than the company's total net worth, which is around R$12 billion.

According to the company itself, half of the company's huge debt comes from banking inconsistencies resulting from the mismanagement of operations known as "risk drawdown", widely used by retail chains and consisting of acquiring funds through bank loans to fulfill contracts with suppliers, so that the creditor becomes the bank, with greater credit than that existing with the supplier. However, these amounts are being investigated, as there is reasonable suspicion of fraud, since some of the company's large shareholders and those directly responsible for it sold their shares months before.

Following the news, the company's shares (traded under the ticker AMER3) fell by more than 70% and trading was suspended. The drastic reduction in value greatly affected the company's major stakeholders and controllers, who held large stakes in the retailer or were directly responsible for its results and decisions.

Faced with this crisis that is affecting the company, its directors have opted to file for judicial recovery, in order to suspend possible executions on the company's debts that are already due, giving it time to prepare a detailed judicial recovery plan through which it would pay off the amounts already due without ceasing its activities.

It is important to emphasize that the company's stakeholders have active legitimacy in drafting the judicial recovery plan, so that it must certainly consider their interests, since they are an important part of the company's value generation, being greatly affected by the decisions taken.

On the other hand, for the judicial recovery to be granted, it must be accepted by the creditors, otherwise the Court competent for the process will convert the company's judicial recovery into bankruptcy, implying its extinction.

To keep the company running, it is essential that the plan to be proposed is a compromise between the opinions and wishes of the company's creditors and its stakeholders.

If the company effectively enters into judicial recovery, and all of its debt is included in the process, this will certainly be one of the largest in the country, entering the select list of the largest judicial recoveries in the country, along with the processes of companies such as Oi (R$ 65 billion), Odebrecht (R$ 54 billion) and Samarco (R$ 50 billion).

With the collaboration of Luis Felipe Simões