Brazil's Grupo OAS Seeks Protection of U.S. Court

Brazilian conglomerate Grupo OAS asked a U.S. bankruptcy judge to help protect its assets from bondholders attempting to interfere with its restructuring efforts abroad.

OAS filed for chapter 15--the section of the bankruptcy code that deals with international insolvencies--at the U.S. Bankruptcy Court in Manhattan on Wednesday, amid a corruption investigation that has engulfed some of Brazil's largest construction firms, court papers show.

If its bankruptcy filing is recognized by Judge Stuart M. Bernstein, OAS will receive the benefits of U.S. bankruptcy law, including the so-called automatic stay that halts lawsuits and prevents creditors from seizing assets.

Prosecutors allege OAS has been involved in the corruption scandal at Brazil's state-controlled oil company Petroleo Brasileiro SA, or Petrobras. Together with other high-ranking executives for some of Brazil's largest construction firms, OAS executives have been charged by prosecutors with money laundering, corruption and criminal conspiracy in the alleged kickback and bribe scandal at Petrobras.

"Despite the OAS Group's prominent position in Brazil's construction and engineering market, ripple effects from the Petrobras investigation and adverse economic conditions have impaired its financial position," a lawyer for OAS said in court papers filed Wednesday.

OAS has denied that it was involved in the alleged corruption.

OAS filed for Brazil's equivalent of chapter 11 bankruptcy protection in a São Paulo state court last month. The company has said it plans to sell its stakes in a shipbuilder, and in oil and gas, defense and environmental units, as part of its restructuring.

OAS is one of the largest and most experienced infrastructure companies in Brazil, building highways, hospitals, water and sewage systems and affordable housing, the company said in court papers.

The company holds about 9.2 billion Brazilian reais, or about $3 billion, in mostly unsecured debt. That includes $1.78 billion in U.S.-dollar denominated notes, the company said.

Luciana Magalhaes contributed to this article.

Write to Tom Corrigan at [e-mail]

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