The judge of the 2nd Bankruptcy and Judicial Reorganization Court (RJ), Paulo Furtado de Oliveira Filho, from São Paulo, has ratified the judicial reorganization plans of the Renova Energia Group. The 61 companies that make up the Renova Group were divided into two groups, for the purpose of judicial reorganization: one involving only the 26 companies that comprise the Alto Sertão III Phase A wind power generation project, in the pre-operational phase, and the other involving the 35 remaining companies. The two plans presented mirror each other and have the same payment terms overall.

The consolidated plan was approved by a significant majority of creditors. The Alto Sertão III Phase A plan had already been approved by the majority of creditors in the classes labor, collateral and micro and small companies. However, 49.97% of unsecured creditors, computed by credit value, approved the plan, when the required approval was 50% plus one.

As such, it fell to the judge to grant judicial reorganization for both groups of companies, which was done on Friday 18 December. The creditors agreed with: the bridge loan for the completion of the Alto Sertão III Phase A project, signed on 17 December 2020, for the amount of BRL 350 million, already included in the records; the sale of assets, the principal asset being the equity interest in Brasil PCH (small hydroelectric plants), in addition to wind energy projects under development; and the renegotiation of debt and the completion of the works for the Alto Sertão III Phase A wind farm.

The plan also includes creditors who are outside of the judicial reorganization but have decided to adhere to its terms. "This shows an important alignment between the Renova Group and the banks, which are the biggest creditors, obtained after an intense negotiation process", analyzes Fabiana Solano, partner in the Dispute Resolution and Restructuring and Insolvency departments of Felsberg Advogados.

According to Fabiana Solano, the granting of judicial reorganization opens important paths for the company and marks the beginning of an important phase with the conclusion of the works of the Alto Sertão III Phase A, which will allow the generation of approximately 400MW of energy, that is, capacity sufficient to supply 420,000 residences for one year.

In his order, the judge stated that “the plans describe in detail the means of recovery, the DIP (debtor-in-possession) bridge loan, and identify the UPIs (isolated productive units), as well as the sale procedure and the destination of the resources”. And he reinforced that "there is no prohibition against a given UPI to be the subject of a contract whose effectiveness is subject to arbitration, as there is no arbitration decision determining the termination of the bond".

Renova Energia has listed debts of BRL 3.1 billion, of which approximately BRL 1.5 billion only is with banks and around BRL 1 billion is intercompany (CGI and CEMIG). The group has among its controllers the state-owned power company CEMIG - Companhia Energética de Minas Gerais.

Thomas Felsberg, Founding Partner of Felsberg Advogados, added that this approval completes an impressive cycle of five large restructuring projects in different areas of the economy that the firm was involved in the last quarter of the year.  

About Felsberg Advogados

Felsberg Advogados is a full-service law firm celebrating 50 years in practice this year. We are a firm defined by our ability to combine experience, tradition and excellence with efficient, fast and focused service, offering innovative solutions and foreseeing our clients’ needs in a constantly changing world.

Our core practices include corporate restructurings, mergers and acquisitions, project development and financing, insolvency, general commercial litigation and arbitration, tax advisory and litigation, labor advisory and litigation, environment, public and regulatory, and real estate. More recently, we inaugurated new practice areas such as fashion law, innovation and start-ups, intellectual property, life sciences, antitrust, compliance, and white-collar crime. We also anticipated future demands with a new data protection and technology department and gaming law team.

We are proud that we focus on selecting and rewarding the best minds, regardless of gender, color, social class, sexual or religious orientation. We count ourselves among a very select list of Brazilian firms to have women comprising 50% of the partnership, and among our lawyers and staff, 57% are women. DiversiFeA, our Committee of Equity, Diversity and Inclusion comprising partners, other fee-earners and staff, promotes regular initiatives and events for the well-being of all members of the firm.