From The Seventh Richest Person In The World To Bankruptcy: Eike Batista Accumulates Billion-Dollars In Debt With Several Companies

After Being Convicted In Court For Several Crimes, Eike Batista Seeks Protection Against Creditors Through A Restructuring Request In Order To Settle His Debts And Escape Bankruptcy

From the peak, after holding the title of the seventh richest person in the world in 2012, with a fortune estimated at approximately $34.5 billion, to the world of bankruptcy. Shortly after becoming the target of Operation Lava Jato and being convicted of the crimes of active corruption, money laundering, and market manipulation and being imprisoned, striking a plea deal with the Federal Public Prosecutor’s Office (PGR), Eike Batista left outside prison a series of billion-dollar debts and declared bankruptcy, even considering that some of his businesses succeeded in the hands of other owners. Faced with the debts, the former billionaire decided to seek protection against creditors, requesting judicial recovery in 2013.

The oil company OGX, established in Eike Batista’s grand plans with the goal of becoming a “mini-Petrobras,” started the debts and the bankruptcy of Eike Batista, as it was the first venture of the former billionaire that failed to deliver the promised performance. Following it, it was the turn of the shipyard OSX and the mining company MMX.

The requests for judicial recovery of the pile stood out for the size of Eike Batista’s debts, putting the current Bankruptcy Law, validated in 2005, to the test. Some methodologies allowed for the restructuring of part of Eike Batista’s debts, such as OGX, which served as a model for situations involving companies and creditors based in foreign countries, according to Juliana Bumachar, a partner at Bumachar Advogados Associados.

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One Of Eike Batista’s Companies Had Bankruptcy Declared After A Request For Judicial Recovery

Other legal processes concerning Eike Batista dragged on, such as the case of the mining company MMX, created with the aim of making the company a “mini-Vale,” which had a troubled start to judicial recovery, partly due to the group of companies behind the shareholding structure, typical of Group X. The company began with two lawsuits in the judiciary, which are running in parallel, one in the Court of Justice of Minas Gerais (TJ-MG) and the other in the Court of Justice of Rio (TJ-RJ).

In both processes, Eike Batista’s mining company had bankruptcy established. The debts total approximately R$ 1.2 billion in the Minas process, according to the judicial administrator, Bernardo Bicalho.

The amount in the judicial process in Rio is lower, but they overlap, as the debts are practically the same. The railroad operator MRS Logistics is the company that has the most to receive. The objective now is to raise as many components as possible with the debenture auction that will be held this Tuesday, the 16th, to pay the creditors.

Conflicting Interests In Eike Batista’s Legal Processes

In light of the processes of the companies in Group X, the controversies already established in bankruptcy cases and debts are fueled by Eike Batista’s iconic and media-savvy personality. The MMX case in TJ-MG gained prominence because, in May 2017, the judicial administrator obtained authorization to “disregard the legal personality” of Eike Batista’s mining company.

In simpler terms, TJ-MG authorizes that assets from Eike Batista’s personal estate and other companies in which the businessman had a stake in the company be included in the process, serving to reimburse the creditors.

According to Bumachar, this approach has been increasingly used in Eike Batista’s judicial recovery processes and debt repayments. The update to the Bankruptcy Law, approved in December 2020, clarified the possibility of accessing the personal assets of the partners of the companies mentioned in the judicial process.

The goal is that if the owner of a company uses the legal entity in an abusive or fraudulent manner, the legal segregation that exists between the businessman’s physical person and the legal person of the firm is “disregarded,” bringing Eike Batista’s personal assets into the process.