Brazilian shipbuilder edges closer to restructuring

Souto, Correa, Cesa, Lummertz & Amaral Advogados
Latin Laywer
06/08/2018

Four firms have helped distressed Brazilian shipbuilder Ecovix get approval from creditors for its judicial reorganisation plan as it battles with debts worth more than 7 billion Brazilian reais (US$1.8 billion).
A majority of creditors voted in favour of Ecovix’s restructuring plan at the end of June. Latin Lawyer understands the plan may get judicial approval this month. Souto, Correa, Cesa, Lummertz & Amaral Advogados and Freire Assis Sakamoto e Violante Advogados are lead counsel to Ecovix. The company has also hired João Carlos e Fernando Scalzilli Advogados for proceedings at the Rio Grande do Sul Court of Justice, while Marinoni Advocacia is providing procedural advice at the Rio Grande do Sul Court of Justice and Superior Court of Justice.

Ecovix Construções Oceânicas, along with its five subsidiaries, blame a downturn in the global shipping industry for their debt problems. Its parent company, Engevix, is also cought up in the cash-for-contracts kickback scandal that centred on state-owned oil company Petrobras.

The group filed for judicial reorganisation before the Court of Rio Grande do Sul in December 2016. Its largest creditor is Tupi BV, a consortium made up of oil and gas companies Petrobras, BG Group and Galp. Banco Bradesco, Caixa Econômica Federal and Cosco Shanghai Shipyard are also major creditors. Latin Lawyer was unable to confirm if any of Ecovix’s creditors relied on external counsel.

The plan hashed out between Ecovix and its creditors comes after months of negotiation. Under the terms of the restructuring, labour creditors will get their entire credit back through a series of instalments. Micro-businesses and other small creditors are set for full repayment in three years. Meanwhile, secured and unsecured creditors will get their credits through the issuance of debentures or other debt instruments. This restructured debt will be paid by an isolated productive unit, which will be spun off from Ecovix. If the plan gets judicial approval, it will be one of Brazil’s largest judicial restructurings to date. Ecovix hopes the restructuring will cut its debt to 3.5 billion reais (US$935 million).

Counsel to Ecovix

Souto, Correa, Cesa, Lummertz & Amaral Advogados

Partners Carlos Fernando Couto de Oliveira Souto, Luis Felipe Spinelli and Rodrigo Tellechea, and associates Erika Donin Dutra, Natália Mariani, Vinícius Fadanelli, Patrícia Lyra, Matheus de Lima Senna and Otávio Domit

Freire Assis Sakamoto e Violante Advogados

Partner Alexandre Faro

João Carlos e Fernando Scalzilli Advogados

Partner João Pedro Scalzilli

Marinoni Advocacia

Partners Luiz Guilherme Marinoni and Daniel Mitidiero

Practice area : Restructuring & insolvency
Country : Brazil
Industry : Manufacturing