#americanas

The company’s billionaire owners and creditor banks start a legal battle, while bankruptcy risk threatens 43,000 jobs

The billionaire crisis of the company that owns Americanas Stores created a public conflict among some of the wealthiest men in Brazil. On one side, there is Jorge Paulo Lemann – the country’s wealthiest man, according to Forbes magazine – and his partners, who are also billionaires. On the other side, banker André Esteves, a BTG Pactual bank partner and the seventh richest Brazilian. 

Esteves' bank lent at least 1.2 billion reais to Americanas, which is owned by Lemann. However, the company obtained an injunction that allows it not to pay the loan until it manages to draw up a plan to solve its debts.

As of last week, Americanas itself declared to authorities that the company owes 40 billion reais. It was revealed days after Americanas announced it found “accounting inconsistencies” of about 20 billion reais in the balance sheets that the company presented to investors and creditors – including BTG.

However, the bank did not like the announcement. BTG took legal action to reverse the judgment in favor of Americanas and, thus, recover the funds. BTG asserted that the "inconsistency" detected was actually a fraud committed by Lemann and his partners Marcel Telles and Beto Sicupira, owners of 3G Capital and majority shareholders of Americanas.

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ours after revealing a scandal that would roil Brazilian markets, Sergio Rial joined a Zoom call with hundreds of panicked investors. It was an attempt to explain the $4 billion accounting gap that pushed him to quit his new job at the helm of retailer Americanas SA.

The Jan. 12 call was a tumultuous mix of English and Portuguese that some analysts were locked out of because the meeting reached its 1,000-participant capacity. Those who were able to cram into the headquarters of Banco BTG Pactual SA — the Sao Paulo-based creditor that was hosting the event — were left “perplexed” by Rial’s presentation, as one participant put it. 

Four hours later, when the shares started trading, the stock plummeted 77%, wiping out $1.6 billion in market value. By the end of the day, bonds had lost half their value. 

Within a week, the company filed for bankruptcy protection with $8.2 billion of debt. 

“I don’t think there’s a company whose debt has gone down this much in two to three days,” said Omotunde Lawal, a portfolio manager at Barings UK Limited who focuses on emerging-market debt. “Maybe this is the fastest plunge ever.”

The startling and rapid meltdown has left Brazilians with the prospect of losing a ubiquitous company known for its unmistakable red-and-white logo and holiday sales, including in Rio de Janeiro where it was founded in 1929. The collapse dragged down the country’s stock market, sent creditors rushing to organize and pitted some of the nation’s most famed investors against each other. Billionaire Andre Esteves’s BTG Pactual, which days before had hosted the meeting with Rial, called it “the biggest fraud in Brazil’s capital markets.”