Telecom giant goes bankrupt: rehabilitation failed, liquidation process has begun

The staggering saga of the Brazilian telecommunications company Oi is reaching its bitter end. An appeals court in Rio de Janeiro approved this week the bankruptcy ruling for the group, thereby putting an end to attempts at rehabilitation and reorganization of the company under judicial supervision.

As part of the decision, the court summarily rejected the appeals filed by financial services giants Itaú Unibanco and Bradesco, among the main creditors of Oi. The judges determined decisively that the group, along with a series of subsidiaries, is no longer able to meet the conditions of the recovery plan that was established for it.

According to the legal ruling, the company will be permitted to continue operating in a temporary format only, in order to prevent damage and the shutdown of essential communication services for the public. In parallel, special managers appointed by the court will oversee the company's liquidation process, the sale of its remaining assets, and the distribution of the funds raised among the various creditors.

The final collapse comes after years of payment delays, severe liquidity distress, and hurdles in completing planned asset sales. Thus ends a drama that began back in 2016 with the company's first rehabilitation process. Although the process was concluded with hope in 2022, the company returned to the courthouse less than a year later with new massive debts.

While the major creditors are expected to face significant difficulties in recovering their money, the situation for the company's investors is even more severe. Capital market experts estimate that the current ruling almost completely wipes out the chance for shareholders to see any value returned from their investment.