Sao Paulo (AFP)

A court in Sao Paulo announced on Tuesday that it had agreed to initiate a safeguard procedure requested by the Brazilian conglomerate Odebrecht, at the heart of a continental corruption scandal, to avoid bankruptcy.

The conglomerate is facing huge debts of 98.5 billion reais ($ 25.2 billion), of which $ 84 billion will be the subject of restructuring talks, the company said.

The backup procedure requested the day before by the conglomerate is the largest in the history of Brazil, ahead of that conceded in 2016 to the telephone company Oi (64 billion reais).

The safeguard procedure allows an over-indebted company, which is not in default, to maintain its activity as jobs and to have six months to settle disputes with its creditors, while it undergoes a reorganization.

"This is a procedure to avoid bankruptcy," told AFP specialist lawyer Daniel Amaral, about the approach of the former flagship of the Brazilian economy. In practice, renegotiation with creditors can extend for 12 to 18 months, according to the lawyer.

In addition to ODB, the procedure concerns about 20 companies in the conglomerate but excludes certain companies, such as the OEC construction group (Odebrecht Engenharia y Construçao) and the Braskem petrochemical group.

Among the major creditors of Odebrecht are the public banks Banco Nacional de Desarrollo (BNDES), Banco do Brasil and Caixa Económica Federal as well as foreign funds holding receivables.

The request for a safeguard proceeding was precipitated by the suspension of the sale of the group's interest in Braskem - a joint petrochemical company formed with Petrobras-- to the Dutch LyondellBasell, and the filing, at the end of May, of a request for safeguarding the subsidiary of Odebrecht Atvos, 2nd largest ethanol producer in Brazil.

Odebrecht, currently in a process of selling assets to limit its debt, has thus found itself in an even more precarious situation vis-à-vis its creditors.

- "Express wash" -

Founded in 1944, the civil construction company Odebrecht SA has become a huge family conglomerate, rocked since 2014 by a huge bribe scandal, revealed by the Brazilian investigation of "Express Wash" and which affected a dozen from Latin American countries and two from Africa.

In Brazil, the Odebrecht group rigged the lucrative outsourcing markets of the state oil giant Petrobras, the biggest corruption scandal in the country's history.

Dozens of politicians have been splashed, including former President Michel Temer (2016-2018) and former left-wing President Luiz Inacio Lula da Silva (2003-2010), currently in prison for corruption and money laundering.

In July, Odebrecht agreed to pay nearly $ 700 million to the Brazilian state, as part of a deal totaling $ 2.6 billion that the group had committed to pay in the United States , to Switzerland and Brazil.

? 2019 AFP