Rio Court Sets Aug. 25 Bankruptcy Hearing for Oi as Cash and Asset Sales Stall

What the August 25 Bankruptcy Hearing Means for Oi

Rio de Janeiro's First Chamber of Private Law has scheduled Oi's bankruptcy judgment for August 25, opening another decisive chapter for the Brazilian telecom operator. Oi had its bankruptcy declared last year, but the decision was suspended after banks appealed, sending the company back into its second judicial recovery process.

In a recent filing, Oi's judicial administrator said the company will have no cash left to cover essential operational payments by the end of August. Projected cash for the end of July, once R$88.1 million, had already fallen to R$19.6 million by April, and the group's negative equity exceeded R$22.6 billion based on March data. The company has also agreed to dismiss about 60% of its roughly 2,000 employees and pay severance in ten installments after an accord with 17 unions, but the measure has not been authorized by the court.

The cash shortage is already disrupting public and commercial services. Supplier Sitelbra recently cut connectivity for Caixa's lottery network, the Bahia public security video monitoring system, Goiás state government systems and Enel service stores in Ceará. Nava Software, Nava Serviços and Hughes had also suspended services earlier. On August 3, Judge Simone Chevrand ordered essential services restored, set a R$5 million fine for noncompliance and barred new interruptions without prior court approval.

Asset sales intended to fund the recovery remain blocked. The Oi Soluções auction on June 17 drew no bids at a minimum price of R$1.4 billion. The sale of Oi's 27.2% stake in V.tal for R$4.5 billion to funds linked to BTG Pactual was suspended by courts after creditor and investor appeals. Oi also has not received R$60.1 million from the sale of UPI Serviços Telefônicos to Método Telecomunicações because regulatory conditions remain pending.

Inside Oi's Liquidity Squeeze and Stalled Asset Sales

Oi's cash cliff: from R$88.1 million to R$19.6 million

The financial trajectory in the court filing shows a company losing its ability to meet ordinary obligations well before the August 25 hearing. If the projected cash depletion occurs, Oi may be unable to pay essential suppliers and remaining staff by the end of the month. With group negative equity above R$22.6 billion, unsecured creditors already face the risk of very limited recovery in a liquidation scenario.

Why the Oi Soluções auction failed and what a lower price would mean

The June 17 auction of Oi Soluções produced no bids at the R$1.4 billion minimum, signaling that buyers either considered the price too high relative to the asset's cash flow or were deterred by the broader Oi litigation and operational risks. A new round at a lower minimum would improve the chance of a sale, but it would also reduce proceeds available to creditors. The administration needs court approval before reducing the price.

The V.tal impasse and the BTG-linked offer

Oi's 27.2% stake in V.tal is one of the largest potential liquidity events in the recovery plan. The R$4.5 billion sale to funds linked to BTG Pactual had been homologated, but creditor and investor appeals suspended the transaction. Until that legal challenge is resolved, Oi cannot convert the stake into cash, leaving the recovery plan without its most valuable anchor.

The court's ability to keep essential services running

Judge Simone Chevrand's August 3 order forced suppliers to restore essential services and imposed a R$5 million fine for new interruptions. That stabilizes public-sector connectivity in the short term, but it does not solve Oi's underlying inability to pay. Suppliers can still seek relief through court filings, and public clients such as Caixa, the Bahia security system and Enel Ceará remain exposed if Oi's cash is exhausted.

Workforce reduction blocked for now

Oi's agreement with 17 unions to cut 60% of its roughly 2,000 employees and spread severance over ten installments still lacks judicial authorization. Without approval, the company may face a larger wage and severance liability at exactly the moment its liquidity is disappearing, adding another pressure point ahead of the bankruptcy judgment.

What the Ruling Means for Creditors, Suppliers and Public Clients

• Creditors and investors: The August 25 hearing is the next decision point for recovery value. A bankruptcy ruling could shift control to a trustee and freeze current settlement discussions, while the V.tal and Oi Soluções proceeds may not be available before year-end.
• Suppliers: Since Judge Chevrand's order prohibits new service cuts without court authorization and imposes a R$5 million fine, any suspension should be preceded by a court filing rather than a unilateral stoppage.
• Public-sector clients relying on Oi connectivity: The Sitelbra disruption already hit Caixa lottery points, Bahia security cameras, Goiás government systems and Enel Ceará stores. Continuity planning should now assume Oi runs out of cash at the end of August.
• Employees and unions: The agreed 60% workforce reduction and ten-installment severance is not yet judicially authorized. The court's position will determine whether the layoff schedule and payments can proceed as negotiated.
• Distressed-asset buyers: Oi Soluções may be reoffered below the R$1.4 billion minimum after the June 17 auction drew no bids. The V.tal 27.2% stake remains blocked by appeals despite the R$4.5 billion BTG-linked offer, and the R$60.1 million Método sale still depends on regulatory approvals.