RIO DE JANEJRO, BRAZIL - Brazil’s new bankruptcy law could lower recovery prospects for the debt of speculative-grade Latin American corporates and incentivize distressed issuers to negotiate pre-packaged arrangements in lieu of in-court restructurings, says Fitch Ratings.
The method of reorganization does not have rating implications but, due to the veto of a provision in the law related to contingent liabilities on asset sales, asset values could be negatively affected or buyers discouraged from bidding, which could adversely affect debt recovery.
President Jair Bolsonaro signed the new bankruptcy law on December 24th, 2020 but vetoed numerous provisions . . .
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