Brazil: one more retailer prepares for judicial recovery 

The drugstore retailer Poupafarma is analyzing a request for judicial recovery.

At the end of February, the company requested a preliminary injunction in preparation for the recovery process in the São Paulo courts.

The case is in the 1st Regional Court of Corporate Competence and Arbitration Conflicts.

The Investfarma group, the controller of Poupafarma and other drugstore brands, is also a plaintiff in the lawsuit.

The crisis involves an operation with about 80 stores and R$680 million in annual revenues, according to the newspaper Valor Econômico.

In documents sent to court, the company reported that the chain had a loss of R$117 million in 2022, that there were difficulties in obtaining credit lines on the market, and also felt the effect on leverage of high-interest rates.

The group reported that the request for advance relief of the recovery process was made to obtain the effects of the stay period by the network when no collection or constriction can be made within 180 days.

This protection is possible in the case of companies that are already in judicial recovery.

The stay períod request was granted in late February.

“The group is preparing the necessary documentation for the filing of the recovery request, aiming to overcome its economic-financial crisis to maintain its activities and the social function of the companies and the jobs of its workers,” it informed in the lawsuit.

According to Investfarma, the pandemic affected the integration of acquired businesses and the impact of rising interest rates and an imbalance in the sector’s supply chain.

After 2021, interest rate pressure on supply chains and stock-outs with drug shortages at times “disproportionately harmed small and medium-sized operations,” it said in a statement.

A restoration of debts for 2023 also ended up not evolving because of the retail credit crisis, “which practically exhausted” the prospects for refinancing, “requiring a more drastic action of cost reduction and renegotiation.”

With information from Revista Oeste