Giant company collapses: 300 branches closed, thousands of employees fired
With massive debts of 17.3 billion reais, enormous losses, the closure of about 300 branches, and the firing of thousands of employees - retail giant Casas Bahia has reached the red line | All the details on the collapse shaking Brazil
A massive storm is shaking the retail world in Brazil: retail giant Casas Bahia has filed an official request for restructuring under court supervision (protection from creditors) at the court in Sao Paulo.
The company reports unprecedented liabilities of approximately 17.3 billion Brazilian reais to about 19,400 creditors. The rapid collapse follows huge losses, as in the second quarter alone, the chain recorded a staggering net loss of 10.1 billion reais — 18 times the loss reported in the same period last year.
To cope with the severe cash flow crisis, the chain took drastic measures, including the immediate closure of 298 branches across the country and a widespread wave of layoffs of between 2,000 and 3,000 employees.
The crisis was exacerbated by a severe credit crunch from suppliers and insurance companies, which led to a sharp decline in inventory worth over a billion reais and severe shortages of goods in stores. In addition, the accounting firm EY refrained from providing an official opinion on the financial statements, citing serious doubts about the company's ability to continue operating as a "going concern."
The company's stock has plummeted by 78% since the beginning of the year on the Brazilian stock exchange, while the chain's management is now asking the court for an injunction to prevent creditors and suppliers from seizing equipment, goods, and inventory.
