Court order disrupts Braskem debt plan

The 2nd Bankruptcy and Judicial Reorganization Court of São Paulo issued an order suspending Braskem’s ability to carry out new implementation acts related to Operação BAKIDE, the restructuring plan involving its Mexican unit Braskem Idesa. The ruling bars new transfers, the granting of new guarantees and the execution of option-to-buy or option-to-sell commitments connected to that operation. These restrictions directly affect how Braskem can move forward with the planned structure and funding of the transaction while the extrajudicial recovery is under scrutiny.

Reports on the Mexican restructuring indicate that Operação BAKIDE involves total commitments of about US$800 million. Within this figure, roughly US$415 million is described as debtor-in-possession (DIP) financing, and around US$71 million is expected to be provided in cash at closing. The court’s decision therefore touches a transaction with significant funding components, potentially influencing the timing and mechanics of capital deployment tied to the operation.

As part of the same decision, the court appointed ACFB Administração Judicial Ltda. as external administrator to accompany Braskem’s extrajudicial recovery process. This administrator is tasked with overseeing the case as the company and its stakeholders navigate the restructuring framework. The appointment adds an additional layer of oversight to Braskem’s efforts to reorganize its liabilities and execute Operação BAKIDE.

The judge also instructed Braskem and its controlling shareholders, Petrobras and the Shine I/IG4 vehicle, to provide detailed documentation and explanations about Operação BAKIDE within 15 days. The required materials include information on corporate approvals, key contracts, cash-flow projections and the sources of financing for the transaction. These disclosures are intended to clarify the structure and feasibility of the operation within the broader recovery proceedings.

Judicial summaries cited in the proceedings refer to very large levels of total group liabilities for Braskem, including a substantial volume of financial credits included in the recovery. While the ruling is focused on Operação BAKIDE and the extrajudicial recovery process, the size of these reported exposures underscores the importance of how the restructuring is executed. Constraints on implementing the Mexican unit’s reorganization may therefore be significant for Braskem’s overall financial strategy.

Braskem has stated that it has been informed of the court’s decision but has not yet been formally served. The company noted that the order remains pending official publication and that management is analysing its implications. Braskem indicated it will keep the market informed of any relevant developments arising from the ruling and from its ongoing extrajudicial recovery efforts.