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Bradesco and Itaú Rush to Court to Halt Oi’s Bankruptcy and Try to Save R$ 4 Billion Before Assets Turn to Dust
The legal offensive against Oi’s bankruptcy has entered a decisive phase, with Bradesco and Itaú triggering the Court of Justice of Rio to suspend the decision that ended the company’s judicial recovery. The two banks, alongside BB, Caixa, and Santander, have about R$ 4 billion to receive via guarantees and are aiming for a scenario where the company returns to a restructuring regime instead of being liquidated.
In practice, creditors are trying to turn Oi’s bankruptcy into a reversible stage, at least until the appeals court assesses whether liquidation is indeed the least harmful course. The internal assessment is that the operator is depleted, with assets that have lost value and whose hasty sale could convert significant equity into little to no financial return, increasing the risk that “only dust” remains for those at the end of the line.
How Bradesco and Itaú Are Attempting to Reverse Oi’s Bankruptcy
The first front is procedural. Bradesco and Itaú have already filed pleas for a suspensive effect to the decision of the Seventh Business Court of Rio de Janeiro, which declared Oi’s bankruptcy and provided for the gradual transfer of the company’s services.
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The goal is clear: to freeze the practical effects of the ruling until the Court of Justice reviews the merits.
The banks argue that maintaining judicial recovery is “the most efficient and least burdensome means” for both satisfying creditors and preserving the telecommunications company’s business activities.
In other words, they prefer to negotiate within a restructuring plan than to watch a liquidation of fragmented and depreciated assets.
Depleted Assets and the Fear of Turning to “Dust”
The diagnosis from creditors is harsh. Under the current setup, the main remaining assets of Oi that could be sold are Oi Soluções (corporate segment), Serede (network maintenance), and Tahto (call center).
The problem: these businesses are anchored in service contracts that can be terminated, which diminishes buyer interest and reduces liquidation value.
For banks and other creditors, Oi’s bankruptcy at this time tends to crystallize a low recovery scenario, especially since the company has already sold significant portions of the former group during the second judicial recovery.
The prevailing perception is that the more disorganized the sale, the greater the chance that the assets will become “final dust” in terms of financial return.
The Sensitive Point: The Judge and Sales from the Second Judicial Recovery
One of the points of friction is how the ruling dealt with the second judicial recovery.
Judge Simone Gastesi, from the 7th Business Court, questioned the terms of asset alienations conducted during this cycle, determining the unavailability of the amounts obtained from these sales until a new assessment in a separate proceeding.
She cited, among the main assets alienated or encumbered, the copper network, Oi Fibra (now Nio), the subscription television operation, and a significant part of the real estate portfolio.
For financial creditors, this type of stance could open a precedent for legal insecurity, especially for investors purchasing assets from companies in judicial recovery.
Behind the scenes, there is fear that a more restrictive interpretation of alienations approved in creditor assemblies could affect future restructurings, increase financing costs, and disrupt the distress market, which relies on such operations.
Bradesco: Creditor, Client, and Advocate for Operational Continuity
In the presented appeal, Bradesco structures its argument in three layers.
The first is economic: the bank claims that Oi’s bankruptcy, rather than preserving value, tends to be “more detrimental” to the collective interests of creditors and the public when compared to the continuation of judicial recovery.
The second is operational. Bradesco points out that Oi provides data network, voice, cloud services, and Wi-Fi to hundreds of branches, particularly in units located in the North and Northeast regions, in hard-to-reach municipalities.
Abruptly interrupting this network, the bank argues, would directly impact essential financial services for the population in these areas.
The third layer is patrimonial. Bradesco explicitly cites:
- credit of R$ 74.3 million outside the judicial recovery process
- 7,877 properties in the names of Oi and its subsidiaries, estimated at around R$ 5.8 billion
In the bank’s view, an organized sale of these assets within the judicial recovery would allow for “an effective and less destructive asset reorganization” than the bankruptcy liquidation.
The message is clear: before consolidating Oi’s bankruptcy, the structured asset sale pathway outlined in a plan approved by creditors should be exhausted.
Itaú: Critique of “Haste” and Billion-Dollar Dispute in Oi’s Bankruptcy
Itaú follows a similar line but emphasizes the proportionality argument.
The bank claims it holds unsecured debts of approximately R$ 2.06 billion and argues that the declaration of Oi’s bankruptcy was “precipitated” for not considering viable alternatives for restructuring.
In its motion, Itaú asserts that:
the continuation of judicial recovery is the least burdensome path for creditors and for the economy itself
there was a lack of “joint work” among public agencies, judicial managers, and other actors to explore other solutions before bankruptcy
the Oi group still holds equity stakes, copper reserves, judicial deposits, credit rights, and values related to arbitration processes, which would raise the estimated assets to a range between R$ 20.1 billion and R$ 50.1 billion
The bank’s reading is that there is equity to be organized and monetized, as long as the process is not conducted under the stricter and more destructive logic of bankruptcy.
By requesting a suspensive effect, Itaú seeks to buy time for a possible revision of the plan, with new amendments and a new creditors’ assembly, to be put on the table before liquidation advances.
Legal Insecurity, Credit Market, and Systemic Effect
In the background, the dispute over Oi’s bankruptcy transcends the individual situation of the company.
Bradesco and Itaú directly or indirectly warn of the risk of contaminating the judicial recovery market if similar decisions multiply in other significant cases.
If investors perceive that alienations approved in assembly can be reanalyzed and blocked years later, the likely outcome is:
- increased credit costs for distressed companies
- less appetite from funds and strategic buyers for assets in restructuring
- reduced practical effectiveness of judicial recovery, which depends on predictability to attract new capital
The battle surrounding Oi’s bankruptcy thus also becomes a stress test for the Brazilian insolvency system: to what extent can the Judiciary review past decisions without undermining confidence in plans already voted on and executed.
What Comes Next in the Dispute for Oi
In the short term, the next step is the analysis, by the Court of Justice of Rio, of the pleas for suspensive effect presented by Bradesco and Itaú.
If the court accepts the appeals, Oi’s bankruptcy may be temporarily frozen, allowing for new negotiations between the company, creditors, and the judicial manager.
If the request is denied, liquidation will proceed, asset sales will accelerate, and the window for reorganizing the group will close almost definitively.
We are at a turning point: either Oi returns to a judicial recovery format with adjustments, or it embarks on a liquidation path that is likely to be long, complex, and with uncertain returns for those still owed billions.
In your view, should the Judiciary prioritize the continuity of Oi’s judicial recovery or maintain bankruptcy as a way to “turn the page” on the case, even with the risk of lower returns to creditors?
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