Brazilian Congress to investigate crisis at retail giant Americanas

By Daniel Carvalho

Americanas recorded a total debt of R$42.3 billion (US$8.46 billion) in its restructuring proposal, although the figure is closer to R$50 billion (US$10 billion).

While former CEO Sergio Rial and the current chief executive have testified in Congress since the crisis began, the trio of billionaires who are Americanas’ main shareholders has remained virtually silent.

The management team that ran the company until the end of the year has also refrained from making public comments.

Although Americanas remained in operation without widespread layoffs or store closings thanks to a capital injection from major shareholders, the incident affected a long chain of suppliers.

The incident also contributed to tightening credit conditions in Brazil in general, as banks became more conservative due to their exposure.

Billionaire shareholders Jorge Paulo Lemann, Marcel Telles, and Carlos Sicupira said they were unaware of the company’s accounting problems.

The hedge fund Verde Asset Management, which held some of Americanas’ local securities, called the incident Brazil’s biggest fraud.

Americanas has made a restructuring offer, and negotiations with the banks, its largest creditors, have moved forward with an expected agreement in the coming weeks, according to people familiar with the matter.

The company plans to impose losses of between 60% and 80% on unsecured financial creditors, depending on a range of options.

The investigation will increase the workload in Congress, which seeks quick votes on the government’s new tax structure proposal.

Finance Minister Fernando Haddad and Institutional Relations Minister Alexandre Padilha quickly said that the commission’s work would not affect the government’s agenda in Congress.

Earlier on Wednesday, Senate President Rodrigo Pacheco authorized the creation of a separate commission to investigate the January 8 attempted insurrection carried out by right-wing groups that refused to accept Jair Bolsonaro’s defeat in the October presidential election.

The commission will include members from both houses of Congress.

With information from Bloomberg