Americanas, the Brazilian retailer at the heart of an accounting scandal that has pitted some of the nation’s biggest corporate names against each other, has filed for bankruptcy protection hours after revealing its cash reserves have evaporated.
Backed by several Brazilian billionaires, including the country’s richest man Jorge Paulo Lemann, Americanas has been in crisis since revealing accounting “inconsistencies” of more than R$20bn ($3.8bn) more than a week ago.
Since the company’s shares have plunged more than 85 percent and have been embroiled in a bitter legal battle with creditors, including Banco Bradesco and investment bank BTG Pactual.
After a court order on January 13 prohibiting banks from freezing or seizing Americanas assets, BTG took an unusual personal shot at the company’s billionaire supporters, which in addition to Lemann also included Marcel Telles and Carlos Alberto Sicupira. Three own about 31 percent of the business.
“The three richest people in Brazil (with assets worth R$ 180bn), who are anointed as a kind of demigods of the ‘good’ world capitalism, caught in the cash register of what, since 1982, has been one of the main companies of the trio,” he said BTG’s lawyer in the submission to the court.
“Despite their successful trajectories written in bestsellers, Lemann, Telles and Sicupira built their empire on a foundation that is not as solid as it seems.”
The three declined to comment.
Lemann, Telles and Sicupira are the founders of private investment group 3G Capital, which owns shares in Chicago-based Kraft Heinz as well as the parent company that controls Burger King. 3G Capital is not involved in the dispute because it does not own shares in Americanas.
The three billionaires rose to fame in the late 1980s after acquiring Brahma, a domestic brewery, which they later used as a platform to assemble what would become the world’s largest beer company – Anheuser-Busch InBev – through a series of daring acquisitions through more than thirty years.
On Wednesday, BTG successfully overturned part of the January court order, obtaining a new ruling that allowed it to withhold R$1.2 billion from the company to offset part of its debt.
Then on Thursday, Americanas announced that only R$800m was available in cash, shortly before filing for bankruptcy protection. The retailer claims it owes R$43bn to the court.
“I don’t think so [Americanas] want to live It was a Herculean mission [to restructure]”said Geraldo Affonso Ferreira, independent non-executive director and chairman of the advisory board at asset manager ESH Capital.
“The main problem is to find financiers after everything that has been revealed so far. They have cash below R$ 1bn. Who is going to give them money to buy and sell things?”
Americanas is a ubiquitous brand on Brazilian high streets and malls. The company employs over 40,000 people and operates more than 3,500 stores, selling everything from electronics to snacks and homeware.
The accounting “irregularity” of R $ 20bn comes from common operations among Brazilian retailers. Banks will pay Americanas suppliers first, with the company then responsible for repaying the loan, including interest payments.
These interest transactions, however, were effectively camouflaged by the company, which does not classify as financial debt. The practice, which has resulted in reported higher profits, is believed to have been going on for years.
The scandal was revealed just two weeks after Sérgio Rial, the former head of Santander’s Brazilian unit, took the helm at Americanas. He resigned immediately after announcing the news, with the company now run by João Guerra, the former head of HR.
The company’s final audited accounts in 2021 were signed by PwC. The Brazilian Investors Association, known as Abradin, called on regulators to investigate PwC, calling the scandal a “million-dollar fraud”. PwC declined to comment.