Brazilian Court Denies BTG’s Request to Overturn Suspension of Americanas’ Debt Payments

In a decision on the injunction, the court has ruled that if the case were urgent, the bank would have sought to execute its credits before the 20-billion-reais loss was made public

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Bloomberg Línea — Brazilian judge Leila Lopes of the Courts of Justice of Rio de Janeiro has denied BTG Pactual’s request to suspend the injunction that has protected retail giant Americanas from its creditors, arguing that there are no reasons to suspend the decision of the first instance without analyzing the merit of the issue, as requested by BTG.

The injunction that prevented the execution of Americanas’ debts was granted on Friday, January 13, but the following day, BTG asked for the suspension of the decision alleging that it protects an “accounting fraud” by Americanas, which said it had discovered “accounting inconsistencies” of R$20 billion (almost $4 billion), and wants to suspend the execution of the debts it contracted. BTG lawyers argue the court injunction orders the reversal of a payment made by Americanas to BTG, and which would be illegal.

When contacted by Bloomberg Línea, BTG said it would not comment on the decision.

In the request made to the TJ, BTG said it was a creditor of 1.2 billion reais ($234.4 million), and that the debt had already matured and should be paid, were it not for Friday’s injunction.

In Monday’s decision, however, the judge said there was no urgency to suspend the injunction and authorize payment. According to Lopes, Americanas’ total debt with the bank is around 3 billion reais ($586.4 million), and the 1.2 billion reais would represent derivatives that, according to BTG, would not be subject to judicial reorganization - but which are, according to the judge.

If there was an urgency in granting the request, Lopes said, the debt would have been paid before, and not just after Americanas disclosed the 20-billion-reais ‘gap’ on January 11.

“Furthermore,” the judge continued, “there is no greater damage to the creditor bank, given its notorious net worth of more than 42 billion reais, with a market value close to 85.18 billion reais ($16.6 billion).

The decision may indicate the fate of the other requests for suspension of Friday’s decision.

Bank of America (BofA) and BV (formerly Banco Votorantim) also filed motions on Monday. Both say their loans to Americanas should not be subject to reorganization.