Factbox: Osx's Path Through Brazil's Bankruptcy Process

Moody's warns of bankruptcy in Scranton as city faces $20 million budget gap

Brazil's bankruptcy law was enacted in 2005 to correct inefficiencies in the previous system, which was based on postponing debt payments rather than saving a company through renegotiation or restructuring. Creditors, who rarely saw repayment following a bankruptcy filing, would charge exorbitant interest rates in response. Inspired by the U.S. bankruptcy code's Chapter 11 procedure, creditors now play a key role in Brazil's process, which is designed to increase recovery rates, reduce credit risk, and bring down the cost of financing. Some of the largest Brazilian companies to have filed for bankruptcy protection under the new law include airlines Viacao Aerea Sao Paulo SA, known as Vasp; Viacao Aerea Rio-Grandense SA, or Varig; pulp producer Eucatex SA, and electricity holding company Grupo Rede Energia SA. While some companies, such as Eucatex, have successfully emerged from the process, others such as Vasp were liquidated. Others, such as Grupo Rede, were sold off. The following is a look at the process OSX and OGX will undergo now that it has requested legal intervention, based on a report from Goldman Sachs Group analysts led by Felipe Mattar: STEP 1 A local judge, as opposed to a federal judge in U.S. bankruptcy cases, is assigned to OSX's case and appoints a legal manager for the company, who could be either an independent individual or a representative from a company with recognized expertise.
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In a weekly publication, Moodys warned investors that Scranton could be facing the threat of default or bankruptcy thanks to a $20 million budget gap for the fiscal year that begins Jan. 1. The city is supposed to approve a new budget by Nov. 15, which would have to close that deficit to balance the budget. Without a balanced budget, the ratings agency warned that two financial institutions could withdraw from scheduled debt financing for the beleaguered northeastern Pennsylvania city. The resulting liquidity squeeze would leave the city with few options to meet its financial obligations, raising the threat of default or bankruptcy, warned Moodys analysts.
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Ship builder OSX files for bankruptcy protection

First, filing a complaint may cause harm to the debtor even before service is perfected. Second, the alternative to dating violations from the filing of the complaint can become factually complicated. Third, there is no viable logic for http://san-diego-bankruptcy-lawyer.com protecting debt collectors who have filed complaints but not yet served process. And finally, the relevant bankruptcy-law question is when the claim is minimally actionable, not when it is fully matured. The final issue the court had to resolve in determining standing was whether Tylers failure to schedule the asset in his bankruptcy filings deprives him of the right to bring the claim. Failure to schedule an asset does have an affect on whether the trustee abandoned it. If the trustee abandons it, Tyler can pursue it. But he must schedule it first. After that, it is only when the trustee declines to pursue it that Tyler will possess the requisite standing to bring his claim.
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Batista's Ship Builder OSX Files for Bankruptcy Protection -- Update

As Mr. Batista and his advisers move to try to save the once-promising empire, the group is starting to drop the letter X. MPX changed its name to Eneva following the entrance of a new co-controller, German power company E.ON SE. OGX's shareholders will vote later this month on a new proposed name, Oleo e Gas Brasil SA. OSX is expected to follow suit. While the X world crumbles, executives close to Mr. Batista are pinning their hopes on the Tubarao Martelo oil field, which is expected to start producing oil for the first time later this month. It is still unclear how much Tubarao Martelo will be able to produce. And beyond that, OGX is still low in cash and needs some $150 million by January to maintain operations at the field.
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Bankruptcy FDCPA Case Dismissal Upheld on Appeal

At least $850 million of these debts were issued as part of a syndicated loan organized by Brazil's banking giant Itau Unibanco Holding SA, as well as European banks ING Groep NV and Banco Santander, according to OSX statements. Instead, the bankruptcy filing is mainly a blow to the Brazilian government, which has poured loans into Mr. Batista's businesses through government-owned banks and investment funds. In the case of OSX, officials believed the company would help revive Brazil's shipping industry and create jobs. Even though mainly government creditors are on the hook, the bankruptcy has implications for private banks. Spain's Banco Santander provided a guarantee to the loan issued by Caixa, and Brazil's Banco Votorantim issued a guarantee to the loans issued by BNDES, according to company statements. Prior to the filing, Brazil's government-backed Caixa and BNDES both agreed to extend the maturities on OSX loans coming due, giving Mr. Batista an important reprieve. Other OSX creditors that must now turn to Brazilian bankruptcy courts to recoup their money include suppliers, such as Spain's Acciona SA and Italian and Argentine conglomerate Techint Group, according to people familiar with OSX's borrowing.
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