By Brazil Stock Guide – Brazil’s Rio de Janeiro Court of Appeals has suspended the bankruptcy of Oi S.A. (OIBR3) and restored the telecom operator to judicial recovery, reversing a ruling issued earlier this week by the 7th Business Court. The decision followed appeals from Itaú and Bradesco — two of the company’s largest creditors — who argued that an immediate liquidation would generate systemic risks and jeopardize essential government and corporate services supported by the operator.
The ruling, issued by Judge Mônica Maria Costa of the First Private Law Chamber, stated that putting Oi into bankruptcy now would create “severe losses” for creditors and for the public. Oi maintains critical connectivity for the Armed Forces, the Judiciary and numerous federal and state bodies. Costa also noted that a forced liquidation could destroy asset value, sharply limiting creditor recovery potential.
The judge ordered an investigation into the role of U.S. asset manager Pimco, which became the controlling shareholder after converting debt into equity. Pimco, with $2.2 trillion in assets under management, has played a central role in Oi’s governance since the restructuring.
In their appeal, Itaú and Bradesco argued that—even acknowledging management’s failure to meet parts of the previous restructuring plan—the collapse of a company of Oi’s scale would be more harmful to society than maintaining judicial recovery. They cited a sizable pool of monetizable assets, including 7,877 properties valued at R$5.8 billion, corporate stakes, judicial deposits, physical assets and arbitration-linked credits worth an estimated R$20 billion to R$50 billion. A trustee report from October indicates Oi holds R$45.5 billion in external debt.
The ruling also revives scrutiny of Oi’s long deterioration, rooted in expansionist policies of the 2000s. Under the “national champions” strategy, the Lula administration altered telecom rules in 2008 to allow Oi to acquire Brasil Telecom, adding new debt pressure. The subsequent entry of Portugal Telecom and the 2014 merger introduced additional liabilities and asset-valuation controversies that worsened leverage.
Since entering judicial recovery in 2016, the company has dismantled much of its original structure: selling its mobile unit, spinning off its fiber operations into V.tal (now controlled by BTG Pactual), rebranding Oi Fibra as Nio and divesting its pay-TV business. Even after these sales, the company struggled to regain operational strength.
Today, Oi’s core business is Oi Soluções, which provides cloud, cybersecurity and mission-critical connectivity to large enterprises and government agencies. In 2024, Oi exited its historic fixed-line concession, operating only under transitional agreements valid through 2028.
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