Odebrecht is filing for bankruptcy protection over debts of more than $20 billion (Yasuyoshi Chiba)

Sao Paulo (AFP) – A court in Sao Paulo on Tuesday accepted a request by Brazilian conglomerate Odebrecht to begin a corporate recovery procedure aimed at fending off bankruptcy at the scandal-tainted group.

In the request, submitted on Monday, Odebrecht declared colossal debts of 98.5 billion reais ($22.3 billion), of which 84 billion reais would be subject to restructuring negotiations.

It is the largest such recovery request in Brazil’s history, eclipsing telecom provider Oi’s 64 billion reais process three years ago.

The recovery process aims to find a viable way for a debtor to continue its operations while giving it time to restructure its debt.

The goal is “avoiding bankruptcy,” lawyer and recovery specialist Daniel Amaral told AFP, adding that talks with creditors could last 12 to 18 months.

As well as the controlling Odebrecht conglomerate (ODB) the procedure includes around 20 separate companies within the group but leaves out certain major ones including the construction arm, OEC (Odebrecht Engenharia y Construcao) and petrochemicals affiliate Braskem.

Odebrecht’s main creditors are Brazilian banks Banco Nacional de Desarrollo, Banco do Brasil and Caixa Economica Federal, as well as bondholders.

The company has 60 days to submit a repayment proposal.

Founded in 1944, Odebrecht S.A. has long been one of Brazil’s economic giants, building everything from the Miami Heat basketball arena to a hydroelectric dam in Angola. 

It fell into turmoil in 2014 when it was embroiled in the wide-ranging Car Wash corruption scandal and has since admitted paying almost $800 million in bribes in a dozen mostly Latin American countries.

It was the biggest corruption scandal in Brazil’s history and two former presidents have been caught up in it.

Luiz Inacio Lula da Silva (2003-10) is serving an eight-year, 10-month prison sentence for accepting a bribe while Michel Temer (2016-18) has spent two brief periods in preventative detention while he is investigated over corruption and money laundering.

Odebrecht’s request for bankruptcy protection was precipitated by the suspension of the sale of the group’s interest in Braskem — a joint petrochemical company formed with Petrobras — to Dutch firm LyondellBasell, and the May filing for bankruptcy protection by Odebrecht Atvos, the second-largest ethanol producer in the country.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.