Two Courts, in Brazil and US, Decide Today Bankrupt Varig’s Future

A director in Brazil’s union of workers in the aviation sector  (SNEA), Anchieta Helcias, declared that the sale of Varig LogÀ­stica (VarigLog), a former subsidiary of Varig, to an investment group, Volo Brasil, did not comply with Brazilian legislation.

Although the sale took place at the end of last year, only on Friday, June 23, was it approved by the ANAC the civil aviation agency (Agência Nacional de Aviação Civil.

Helcias claims that the participation of a foreign investor, the US Matlin Patterson investment fund, in Volo Brasil is greater than the 20% permitted by Brazilian law.

Helcias also says there are problems because only a cursory examination of Volo Brasil’s economic/financial situation was made.

The reason for the jockeying by the union and ANAC at this moment is the impending formal proposal by VarigLog (read: Volo) for the acquisition of Varig itself.

Meanwhile, and this is what really counts, Volo Brasil continues to pump money into Varig, keeping Brazil’s flagship airline operating, although precariously.

Varig is paying cash on the line for fuel and fighting off leasing companies that seek to arrest its aircraft. Volo has promised US$ 20 million to keep Varig flying until another auction can take place.

A new auction will be necessary, if Varig creditors agree, following the failure of the winners of the June 8 auction to make a mandatory deposit, thereby invalidating the auction.

Further muddying the situation is legal action taken by government tax collectors and social security system agents to confiscate any payments made by a Varig buyer.

Decision

Two courts, one in Brazil and the other in the United States, will decide if it will be possible for Volo Brasil, through its subsidiary, VarigLog, to buy Varig. The decisions are expected today, June 28.

In Rio de Janeiro, at a business court (8ª Vara Empresarial do Rio), judge Luiz Roberto Ayoub, is supposed to emit a definitive decision on the proposal by VarigLog to buy Varig.

In the United States, judge Robert Draian, of the New York Bankruptcy Court, has scheduled a hearing today on the arrest of Varig aircraft by leasing firms.

ABr

Tags:

You May Also Like

Obama to Meet Brazil’s Lula in March and Later Travel to Brazil

It's all set: Brazilian president Luiz Inácio Lula da Silva will meet US President ...

Goldman Hopes do Spend Christmas with Son in Brazil and Complains of Intercepted Letters

Talking to reporters this Friday, outside his hotel in Rio, American David Goldman, the ...

Lack of Capital for Rural Producers Cuts Jobs in Brazil

The Brazilian Confederation of Agriculture (CNA) called attention last week to the decline in ...

Brazil on Its Way to Become Olive Oil Country

Brazil now has its name on olive oil labels that are sold in some ...

125 Countries in Brazil Debating Child Sex, Trafficking and Pornography

Close to 3,000 participants from over 125 countries have gathered in Rio de Janeiro, ...

Brazil Cheers Fed’s Cut and Gets Ready for Bull Times

The surprising US Fed's cut of its federal funds rate by 50 basis points ...

Brazil Starts the Engines of Biodiesel Program

The Brazilian government is launching, today, the National Biodiesel Program, which will permit the ...

A Brazilian gas station also selling ethanol

Brazil’s Ethanol Lesson Is How to Manage Our Oil Addiction

The Brazilian government is declaring victory in its decades-long struggle to become self-sufficient in ...

Lawsuits Won’t Stop Brazil from Building World’s Third Largest Hydroelectric Plant

Despite nasty court battles started by Indians, environmental activists and some of its own ...

March in Brazil Urges Better Housing and Sanitation

Brazil’s National Urban Reform and Cities Rights March, which got underway Monday, August 15, ...