Braskem Files for Extrajudicial Recovery to Restructure R$ 56 Billion Debt

Braskem filed for extrajudicial recovery on Monday, seeking to renegotiate financial liabilities totaling R$ 56.5 billion. The petrochemical giant has 90 days to reach an agreement with its creditors to avoid potential bankruptcy or a full judicial recovery process. The company stated that the restructuring is strictly financial and will not affect payments to employees or suppliers.

The majority of the debt is held by foreign creditors. The Bank of New York Mellon is the largest creditor with R$ 19 billion, followed by a group of international bondholders with R$ 13.4 billion. Other significant foreign creditors include Crédit Agricole, Santander Spain, Barclays, and Citi. Brazilian banks are less prominent in the current filing because several had prior agreements when IG4 assumed control of the company. Among the remaining Brazilian creditors, Safra and Itaú Unibanco are the most affected.

Braskem attributes its liquidity crisis to a prolonged global downturn in the petrochemical industry, characterized by low demand and excess supply. The company also cited extraordinary costs related to soil subsidence in Maceió, Alagoas, caused by its salt mining activities, as well as geopolitical tensions and market volatility. Following the announcement, Braskem shares fell 6.71 percent on the Brazilian stock exchange.

To homologate the plan in court, the company must secure the support of more than 60 percent of creditors. Braskem reported that it currently has the support of 39.6 percent of creditors, representing approximately R$ 22.3 billion of the total debt.