Brazil’s Dying Telecom Giant Oi Turns on Its Own Rescuers
- Oi, the bankrupt Brazilian telecom, filed suit against Pimco, SC Lowy, and Ashmore — the very foreign investors who became its largest shareholders after converting debt to equity in a court-approved restructuring plan
- The company alleges the funds abused their controlling position to serve their own creditor interests over those of other stakeholders, and is seeking to seize their remaining claims against the company
- The case unfolds as Oi fights to stay alive: declared bankrupt in November, temporarily rescued by an appeals court, and now racing to auction its remaining stake in fiber company V.tal — with Pimco among the creditors contesting the sale terms
Oi was supposed to be Brazil’s national telecom champion — created from sixteen state-owned carriers during the 1998 privatization, it became the country’s largest fixed-line operator. Then it became Brazil’s longest-running corporate collapse. Two bankruptcy filings, R$65 billion ($12.3B) in original debt, a decade of asset sales — mobile operations to TIM, Telefónica, and América Móvil; fiber infrastructure spun into V.tal; towers to DigitalBridge; data centers to Elea. Nothing was enough.
Now the company that foreign investors tried to salvage is suing them. On Tuesday, Oi announced it had filed suit against funds managed by Pimco, SC Lowy, and Ashmore, alleging they abused controlling power after converting debt to equity under the court-approved restructuring plan. Oi claims the three firms prioritized their own creditor interests over the company’s survival. The suit, filed under seal on February 12 at the 7th Business Court in Rio de Janeiro, seeks to freeze the funds’ remaining claims against Oi and strip their voting rights in creditor proceedings.
Everyone is fighting for the last assets
The context makes this more than a corporate dispute. In November, a Rio court declared Oi bankrupt. An appeals court suspended the ruling at the request of bank creditors, keeping the company in restructuring limbo. Oi carries roughly R$15 billion ($2.8B) in debt with negative equity. Its most valuable remaining asset is a 27.5% stake in V.tal, the fiber company controlled by BTG Pactual. An auction is expected in March — but Pimco and other creditors are contesting the sale terms, arguing the conditions undervalue their claims.
Pimco has responded forcefully, calling the lawsuit meritless and arguing it violates legal protections granted to creditors who convert debt to equity in restructuring. The fund sold its entire equity stake last November, insisting it never exercised operational control. What international investors are watching is not the legal merits — Brazilian courts will sort those out — but the signal. When a bankrupt company sues the distressed-debt investors who tried to restructure it, the message to future capital is unmistakable: in Brazil’s judicial recovery system, even the rescuers can become defendants. This is part of The Rio Times’ daily coverage of Brazil affairs and Latin American financial news.
Related coverage: Brazil’s Morning Call | Brazil Shipped More Food in January 2026, Got Paid Less for
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error
Read More from The Rio Times