Brazilian Judge Prolongs Bankrupt Varig’s Agony

Luiz Roberto Ayoub, the judge at a Business Court (8ª Vara Empresarial do Tribunal de Justiça) in Rio de Janeiro, Brazil, was supposed to rule today, June 9, on yesterday’s auction of the Brazilian carrier, Varig.

Ayoub should decide whether or not to accept the only bid for Varig, which was made by NV Participações, representing a Varig worker organization (Trabalhadores do Grupo Varig) (TGV).

The bid by TGV consisted of an offer to pay 285 million reais in cash, an additional 500 million reais in debentures and another 225 million reais in receivable credits, totaling around 1 billion dollars (slightly less than US$ 500).

The preestablished asking prices were US$ 860 million for Varig, and an additional US$ 700 million for the company’s domestic flights.

The judge, however, in another unexpected maneuver, has postponed his decision for next week. Apparently worried about being blamed for the end of a company that in times past was the pride of Brazil,

Ayoub is even ready to consider new offers to buy Varig if the TGV bid reveals to be unviable.

The TGV people got until Monday, June 12, to make it clear how they will be able to raise the money to comply with their bid. In case they seem unable to fulfill their part on the deal, Varig would be declared bankrupt.

Tuesday, June 13, will be the bankrupt company’s D Day. It will be the deadline given by a court of New York for Varig to pay its arrears to airplane leasing companies. In case this doesn’t happen, Varig may have airplanes apprehended.

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