Braskem Considers Extrajudicial Recovery Request to Address $10 Billion Debt

Braskem is in advanced discussions to potentially file for extrajudicial recovery as early as August. The move aims to address more than $10 billion in debt across its operations in Brazil, the United States, and Europe. According to sources familiar with the negotiations, the company is facing a deadline of August 24, which marks the end of a protection period obtained through a precautionary measure in June.

Controlled by Petrobras and private equity firm IG4 Capital, Braskem has been struggling with a prolonged downturn in the petrochemical sector. Sources indicate the company may need three to five years to resolve inherited challenges. Its financial position was further weakened by an environmental disaster involving salt mines in Alagoas.

While Braskem has discussed alternatives with banks and bondholders to avoid a lengthy restructuring process, no agreement has been reached. Creditors reportedly rejected a proposal from Braskem that included a five year grace period for principal payments and a two and a half year grace period for interest payments. If the extrajudicial request proceeds, it would include a 90 day stay period to protect the company from creditor actions while a comprehensive plan is negotiated.

Additionally, Braskem is exploring restructuring options for approximately $2 billion in debt held by its Mexican subsidiary. This could involve a Chapter 11 bankruptcy filing in the United States with a timeline aligned with the Brazilian process. Braskem declined to comment on the matter.