Brazilian public prosecutors have requested the courts block the restructuring plan of Eike Batista’s oil group and force the former billionaire to inject $1bn of his own money into the company.
In a move that threatens to delay Brazil’s most high-profile bankruptcy case, state prosecutors in Rio de Janeiro have claimed that the current plan unfairly favours Mr Batista and the major creditors.
In a legal summary of the plan released late on Wednesday, prosecutors concluded that it contains an illegal clause that exempts the Brazilian tycoon from a contract he signed in 2012 to inject $1bn into OGpar, formerly known as OGX.
“Mr Batista himself is not subject to judicial recovery, he is not part of the process and, therefore, he cannot have his debts and other obligations cancelled or reduced by the majority of creditors of the OGX group,” wrote Marcos Lima Alves, lead prosecutor in the case.
OGpar did not respond to requests for comment and Mr Batista could not be reached.
In 2012, Mr Batista personally granted a put option to the oil company as a bold form of insurance for potential investors. Under the rules of the option, Mr Batista was supposed to capitalise the group with $1bn of his own money if it ever ran into financial difficulties.
However, the capitalisation never occurred and the company filed for bankruptcy last October. Last month, OGpar submitted its restructuring plan to the courts following agreements with holders of $3.8bn in bonds, which would force Mr Batista to hand over control of the company but also let him off making the $1bn payment.
Aurélio Valporto, an economist who is leading a group of minority shareholders, said the restructuring plan would leave smaller shareholders with nothing and welcomed the prosecutors’ announcement.
“This is not only a moral victory for minority shareholders but the Brazilian market in general,” he said.