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If Brazil’s Bankrupt Varig Is Sold 7,500 Workers Would be Fired and 40 Planes Retired

Luiz Roberto Ayoub, the judge who presides in the Rio de Janeiro business court that is handling the Brazilian airline Varig case has decided to postpone the assembly of Varig creditors scheduled for next Monday, July 10.

That means a second auction, which should take place two days after the creditor assembly, is also postponed. There is no new date for the creditors’ meeting.

According to court spokespersons, it has not been possible to conclude the examination of the proposal by VarigLog, the former Varig subsidiary which now wants to buy the moribund ex-parent company.

VarigLog’s wants to use only 2,500 workers in the new Varig if it wins the action. The 7,500 other workers would stay with the old Varig, which also would keep all the debts of the company. From the 60 planes Varig has (only 31 are being used at present) only 20 would be enough for the new Varig.

The court (Administrador Judicial) and government legal officials (Ministério Público) must agree that the proposal is viable. It is reported that Volo Brasil, which controls VarigLog, was finalizing its presentation yesterday afternoon.

Spokespersons for Volo Brasil declared that the organization was opposed to a postponement of the assembly and the auction because it is shelling out money to keep Varig operating on a daily basis. So far it has paid over US$ 7 million in current operating costs just to keep the company flying. VarigLog is willing to pay US$ 495 million for what’s left of Varig.

Ayoub, in declarations to the media, said there are questions regarding the minimum price to be asked for the Varig Operacional (which will maintain the airliner’s routes).

Ayoub also pointed out that anyone interested in bidding besides Volo must make a judicial deposit of US$ 22 million. That money would cover the expenses VarigLog is having to maintain Varig afloat in case it loses the coming auction.



  • Show Comments (4)

  • BankruptcyBlogNetwork

    Link on our blog
    Hi, we’ve linked to this article on our blog. Check it out: http://bankruptcyblognetwork.com/?p=18


  • Guest

    Prostitutes are valued higher than Varig
    The Brazil Govt. values prostitutes higher than Varig. I guess that goes to show where the real money is being made. Way to go morons. This is why I’m proud to be an american living in the US.

  • Guest

    Its definitely a ridiculous drama.
    Varig has a long history of corruption and bad management but seems no one or the Brazilian officials have done some effective actions.
    Wake up Brazilians, Varig and the Brazil WC 06 soccer teams are the shames that
    people would ever remember.

  • Guest

    What a joke on the country and the staff of Varig.If this keeps up both the new and old Varig will be flying into the sunset.
    What makes the owners of Varig Log think there can do any better if they have the same turkeys working for them that were the demise of the carrier in the first place? Clean the house now and forever!

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