What is Judicial Reorganization?
Judicial Reorganization (RJ) is a procedure contemplated by law, used to restructure debts incurred by momentary cash flow difficulties, aiming at the operational continuity of companies, such as Grupo Petrópolis. It is important to stress that Judicial Reorganization does not mean bankruptcy. As the name implies, it is only a judicial resource used to protect the company’s cash from possible withholdings and represents an alternative of healthy negotiation with the creditors.
Grupo Petrópolis provides the population with a wide range of services, generates thousands of direct and indirect jobs, and has a strong social commitment. The group is committed to implementing the restructuring and confident that the process will enable financial resizing, as well as contribute to the maintenance of jobs and relationships with the company’s business partners.
Why did the company make this decision?
Petrópolis Group is applying for Judicial Reorganization in order to maintain operations and equalize debts. The company’s management has undertaken efforts and studies to optimize the capital structure and adjust it to the operational, financial and economic situation, which has been worsening in the last 18 months, especially due to the reduction in revenues, sales volume, inflationary pressure, increased costs and difficulties in transferring prices to the products sold.
As part of the efforts undertaken, the management of Petrópolis Group understood that filing the Judicial Reorganization Request would be the most appropriate measure to preserve over 24 thousand direct jobs and an estimated 100 thousand indirect jobs, in addition to maintaining the operational activities and the social function of the group.
How does the Judicial Reorganization affect the company’s strategy and operation?
Grupo Petrópolis will continue to run its activities on a regular basis, providing the technical knowledge necessary to implement the intended restructuring. The company’s growth strategy will remain unaltered, and Judicial Reorganization will help it achieve these objectives by restructuring liabilities and adjusting the capital structure in view of the difficulties presented.
What happens to employees from now?
The RJ order will not affect employee paychecks; rather, this is a measure to ensure that paychecks are kept on schedule. The group relies even more on the support of its employees, as it has been doing in the last 25 years. Grupo Petrópolis is confident that the Judicial Recovery process will enable financial resizing and contribute to maintaining jobs. Over the next few days, there will be meetings with specific teams to clarify any doubts and ensure that the operation will be kept unaltered.
What happens to clients and suppliers from now?
The company must manage its relationship with suppliers to preserve commercial relations and ensure regular business continuity.
Debts contracted after the Judicial Reorganization Application (03/27/2023) will be paid as usual in the original schedule of payments for everything that is not subject to Judicial Reorganization. The company should pay debts within the due dates agreed with suppliers. No payment shall be directly affected due to Judicial Reorganization. Debts contracted before the Judicial Reorganization petition cannot be paid and will be subject to the Judicial Reorganization Plan to be presented by the company.
Invoices issued before the Judicial Reorganization Request (03/27/2023)
Services provided before the Judicial Reorganization Request, even if the Invoice is issued after the date of the request.
IMPORTANT: Invoices issued by suppliers before the Judicial Reorganization Request cannot be cancelled by suppliers for the issue of a new Invoice. The payment of amounts concurrent to the reorganization in bad faith may be considered fraud and a bankruptcy crime. Thus, all payments must be verified and accompanied by a measurement report to confirm the competency of the services.
The company will make contact details available to clear up any possible queries, without affecting the suppliers’ ability to access their frequent contacts.
As for customers, supplies will be maintained without any loss due to the filing of the Judicial Recovery Request.
When and how will debts be paid? Will they be fully paid?
Judicial Reorganization foresees the drafting of a plan that must be approved by the majority of the creditors, in which the terms for payment of the debts will be set out.
What is the most appropriate channel to clarify questions on the Judicial Reorganization process?
Employees: in the coming days, there will be meetings with specific teams to clarify any questions and ensure that the operation will proceed in the same way.
Suppliers: the most appropriate channel to clarify any questions from creditors about the credits listed, the proof of claims and the process of Judicial Reorganization of Grupo Petrópolis is via the legal administrators that will be appointed. A communication letter will be sent immediately to all suppliers in order to clarify the context of the RJ request.