Brazil has made significant strides toward improving creditor rights in bankruptcy cases, but creditors gripe that it's still tough to get repaid.
by Maria O'Brien
Brazilian airline Varig's June bankruptcy filing hardly
surprised anyone, since it's been in trouble for years. But the
decision by Varig's new managers to file for protection from
its creditors was significant because it came just days after
Brazil passed new bankruptcy laws.
Varig's $4.8 billion debt load makes this the largest
Brazilian restructuring since the government spent $6.39
billion to bail out state-owned commercial bank Banco do Brasil
in 1996. The Varig bankruptcy will pit Brazil's largest and
oldest airline against the government Varig's largest
creditor as well as other heavyweights, such as Varig's
pension fund Aerus and foreign-owned leasing agents at General
Electric, Boeing and AIG.
"Varig is going to be a big test for Brazil," says Leonardo
Pereira, chief financial officer for Brazilian cable TV
operator Net Serviços, which completed a $450 million
out-of-court debt restructuring of...
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