Braskem Debt Plan Rejected by Creditors

Bondholders have rejected Braskem’s most recent debt restructuring proposal, intensifying pressure on the company’s efforts to address its large financial obligations. Creditors are insisting that shareholders provide an enforceable capital injection or backstop and have indicated there will be no agreement without such support.

The rejection of the plan underscores growing concern among creditors over the company’s capital structure and their desire for stronger assurance that fresh equity or equivalent support will accompany any debt deal. This resistance has complicated negotiations and is a central obstacle to advancing the restructuring.

Under Braskem’s latest proposal, presented in late August, creditors would provide about $2 billion of new money. Approximately $1.25 billion would be used to repurchase existing debt at up to 50% of face value, while about $750 million would be earmarked for working capital.

The proposal shifts part of the burden of stabilizing the company onto creditors, who would supply significant liquidity and accept discounted buybacks. Bondholders, however, are seeking a clearer commitment from shareholders so that the new money package is supported by additional capital strength from the owners.

Creditors are focusing their demands on Braskem’s shareholders, including Petrobras, asking for an enforceable capital injection or backstop to underpin the restructuring. While Petrobras has expressed a desire to avoid a Braskem bankruptcy, it has so far been unwilling to provide the specific binding commitment creditors are seeking.

This stance has become a key point of contention. Creditors view a shareholder-backed capital commitment as essential to reducing risk, whereas shareholders have been reluctant to commit to the type of formal support being requested.

Braskem filed for out-of-court restructuring on August 24 to address R$56.5 billion of financial debt. The process grants the company 90 days of protection, setting a framework within which negotiations with creditors must progress.

Key milestones include a target date of October 9 for reaching commercial terms and a final milestone on November 22. As the gap between creditors and shareholders has widened, the possibility of a bankruptcy filing has re-emerged as a risk if no consensual deal is reached within the protection window.