By Brazil Stock Guide – Grupo Pão de Açúcar (B3: PCAR3), the Brazilian supermarket chain, pushed back against allegations that it favored creditor banks and maintained a conflict of interest with Itaú Unibanco (B3: ITUB4) during its ongoing out-of-court debt restructuring.
The allegations first surfaced Thursday, July 16, in a report by newspaper Valor Econômico. GPA responded with a formal filing to Brazil’s securities regulator, the Comissão de Valores Mobiliários (CVM), calling the claims baseless. The company said in the filing that “the allegations reported in the news, which were part of the challenges presented, lack factual and legal grounds.”
Six investors and companies filed formal objections to GPA’s restructuring plan, questioning the retailer’s ties to creditor banks — Itaú chief among them. GPA countered that the challenges represent a small fraction of the total claims at stake, out of a creditor pool numbering in the thousands.
Bolstering its defense, GPA pointed to Brazil’s federal prosecutor’s office, which has already sided against the challengers, finding the company’s transactions to be in order and identifying no evidence of fraud, sham dealings, or improper creditor favoritism.
Courts have twice rejected challenges based on the same allegations, denying them in preliminary rulings at both first and second instance, GPA said. Still, the substance of the dispute has yet to be decided — it will be addressed when the objections are formally reviewed and when the court weighs approval of the plan.
GPA said it will respond to the challenges within the legal deadline and expressed confidence they will be dismissed and the restructuring plan approved.
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