When it comes to corporate bankruptcies in the US, the upshot
for investors is typically pretty clear: equity holders bear
the most risk, while senior creditors are paid first. Lenders
and shareholders know where they stand.
Cover Story: Bankruptcy after OGX: The big test
With emerging market defaults poised to rise this year, the restructuring of OGX could set an important precedent for corporate recoveries in Latin America. By Ben Miller and Katie Llanos-Small
In stark contrast, creditors to companies in many
jurisdictions in Latin America lack that clarity or
Take Brazil. The country reworked its bankruptcy and
liquidation legislation in 2005, yet not a single company has
followed the new process fully from start to finish. Many firms
have entered recuperação judicial, as the
protection process is known, but not one has come out of it in
the way the law intended as an analog to the US chapter
Critics say equity holders often emerge more favorably than
creditors from Brazilian bankruptcies, especially compared to
jurisdictions such as North America and Europe.
This has important implications for Brazilian companies that
Already have an account?
Subscribe now for unlimited access to all current and archive news, data and market analysis.
Take a free two-week trial now for the latest news, data and market analysis.