Brazilian airline Azul SA is the latest in a string of overseas carriers turning to chapter 11 in the US, becoming “bankruptcy tourists” to access legal protections largely out of reach in their home countries, according to a Bloomberg Law commentary. Azul’s bankruptcy plan, approved this month, slashes more than $2 billion in debt and allows it to reject aircraft leases it couldn’t easily shed at home. Other foreign carriers seeking chapter 11 in the US over the past five years include Avianca, LATAM, Grupo Aeroméxico, and, more recently, Brazil’s Gol Linhas Aéreas.
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Brazilian budget carrier Azul SA, now backed by United Airlines Holdings Inc. and American Airlines Group Inc., expects a bankruptcy-triggered reduction of debt and a slew of renegotiated aircraft leases to help it generate a profit the next two years, Bloomberg News reported. The airline will refocus growth plans on the domestic market, though it will increase flights to the US to handle strong demand for World Cup soccer matches next summer, Chief Executive Officer John Rodgerson said in an interview. Azul will still accept deliveries of new aircraft from Airbus SE and Embraer SA.
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Bankruptcy Judge Sean Lane on Friday approved Azul’s debt restructuring, allowing the Brazilian airline to cut more than $2 billion in debt and raise capital through a new equity rights offering and investment from American Airlines and United Airlines, Reuters reported. Azul filed for chapter 11 protection in New York in May, aiming to cut its debt and make its business more resilient to market challenges like fluctuations in fuel prices and currency exchange rates.
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Brazil’s central bank on Wednesday held its key interest rate steady at a steep level, as expected, and maintained its hawkish outlook as inflation remained above target, the Wall Street Journal reported. The bank’s monetary policy committee, known as Copom, kept its Selic rate at 15%—among the world’s highest levels—for a fourth consecutive meeting and gave no indication that a cut might be coming anytime soon.
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In an executive order, Trump exempted dozens of Brazilian food products, including coffee and beef, from the 40% increased tariffs he imposed in an ill-fated attempt to help former President Jair Bolsonaro dodge a coup attempt trial, Bloomberg News reported. Together with prior exemptions, the move will leave many of the nation’s major exports free from heightened US duties, a victory for an agricultural powerhouse that ranks as the world’s largest beef and coffee producer and counts the US as its No. 2 trade partner.
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A handful of Brazilian companies are disclosing exposure to Banco Master SA following the liquidation of the troubled lender and the arrest of its chief executive amid a sweeping corruption probe, Bloomberg News reported. Health-care provider Oncoclinicas reported holding 433 million reais ($81.1 million) in Master time deposits, known locally as CDBs.
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Brazil’s government on Tuesday shut down Banco Master, a bank worth up to $16 billion in assets, following a sprawling federal police fraud investigation, the Associated Press reported. Central Bank executive Fabio Carlos Ferreira said in a statement that all assets belonging to Banco Master and its current and former administrators have been seized. The bank, which has faced liquidity problems for months, is now under the control of a government-appointed administrator.
Brazil is looking at taxing the use of cryptocurrencies for international payments, two officials with direct knowledge of the discussions told Reuters, closing a loophole in the country's usual levy on foreign-exchange transactions. One of the sources, who spoke on condition of anonymity about the confidential talks, said the Finance Ministry is looking at expanding its financial transaction tax (IOF) to some cross-border transfers using virtual assets and stablecoins that the central bank classified this month as forex operations.
Brazil's central bank effectively halted operations of mid-sized lender Banco Master, which had struggled in recent months with mounting liquidity pressures, on Tuesday as police arrested its controlling shareholder, Reuters reported. The regulator named a liquidator to handle creditor claims and sell assets, closing a turbulent chapter for Master, which had grown rapidly through an aggressive strategy built on high-yield debt sold through investment platforms.
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Brazilian state-run lender Banco do Brasil on Wednesday lowered its outlook for adjusted net income this year, citing higher funding expenses and rising defaults among local farmers, Reuters reported. The bank now expects annual net income of 18 billion t o 21 billion reais ($3.33 billion-$3.89 billion), down from a previous forecast of 21-25 billion reais. Banco do Brasil, long seen as a pillar of farm credit in the country, has been grappling with record default levels in its agribusiness portfolio, which hit results and raised investor concern over its exposure to the sector.
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