Americanas May Seek Bankruptcy Protection Within ‘Hours’

The announcement comes just eight days after the revelation of 20 billion reais in accounting “inconsistencies,” which sparked a massive sell-off in its stocks and bonds

An Americanas store in Rio de Janeiro, Brazil.
By Julia Leite and Cristiane Lucchesi
January 19, 2023 | 01:54 PM

Bloomberg — Americanas SA (AMER3), the Brazilian retailer backed by billionaire Jorge Paulo Lemann, said it may file for bankruptcy protection “in the next few hours” as its cash position evaporated to just 800 million reais ($154 million).

The announcement comes just eight days after the reveal of 20 billion reais in accounting “inconsistencies,” which sparked a massive sell-off in its stocks and bonds.

Americanas had been granted protection against creditors from a court in Rio de Janeiro on Jan. 13, which also forbade them from freezing or seizing assets. Banks rushed to file motions to overturn the decision, and on Wednesday Banco BTG Pactual SA (BPAC11) was allowed to block 1.2 billion reais to compensate to part of the company’s debt, accelerating the crisis.

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Americanas had just 800 million reais available for its activities, part of which it was unable to access, the company said in a Thursday morning filing.

“Because of this, although it has not yet been decided, the management is working with the possibility of, in the next few days or potentially in the next few hours, approve the filing, on an emergency basis, of a request for judicial recovery,” it said.

While Americanas said it’s still assessing the extent of the accounting flaws, its disclosures to investors so far imply it misreported numbers tied to financing of debts with suppliers while also wrongly deducting interest paid to lenders from its liabilities. The practice had two effects: It artificially increased profits and it reduced reported liabilities. The company is still assessing how far back the problems go, so adjustments that have already doubled liabilities are still not final.

Americanas is one of the oldest and most iconic retailers in Brazil. The company has some 3,600 stores in more than 900 cities, over 5,000 suppliers and 40,000 employees. Lemann, Marcel Telles and Carlos Alberto Sicupira have been key shareholders for 40 years.

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On Jan. 16, Americanas hired Rothschild & Co. as its adviser in the debt renegotiation.

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