Brazilian court approves Agrogalaxy’s bankruptcy protection request

A Brazilian court in the state of Goiás has approved the bankruptcy protection request from Agrogalaxy, an agricultural input distributor. 

Judge Alessandra Gontijo handed down the decision to Amaral, who granted the company permission to draft a financial recovery plan.

In a detailed ruling spanning over 30 pages, the Brazilian judge deemed Agrogalaxy’s debts as "unpayable." The judge had earlier already issued an injunction halting the collection of all debts until the merits of the bankruptcy request could be fully assessed.

Additionally, Judge Amaral blocked banks such as ABC, Daycoval, Santander, Citibank, and Banco do Brasil from withholding Agrogalaxy’s receivables entering tied accounts from today onwards. However, funds that were already withheld before the bankruptcy filing do not need to be returned.

The ruling also suspended any contractual clauses allowing for accelerated debt maturity, rapid amortization, or the enforcement of guarantees, except for contracts tied to derivative operations. The judge also rejected some banks' requests to classify certain assets as essential, which would have exempted them from the bankruptcy protection timeline.

The court named lawyers Miguel Cançado and Aluizio Craveiro Ramos as the administrators overseeing the case. Attorney Lúcio Flávio Siqueira de Paiva is representing Agrogalaxy, the current president of the Brazilian Bar Association (OAB) in Goiás.

With the approval of the request, Agrogalaxy now has 60 days to present a restructuring and creditor repayment plan. Should they fail to meet this deadline, the judge could summon the company again or declare bankruptcy. Once the plan is presented, creditors will have 30 days to raise objections.

Agrogalaxy reported total debts of R$4.6 billion owed to banks, suppliers, and employees.

(Editing by Leonardo Gottems, reporter for AgroPages)