Brazil bankruptcy protection requests hit record as economy slumps

miércoles 5 de agosto de 2015 11:21 GYT
 

SAO PAULO Aug 5 (Reuters) - Brazilian companies this year have filed the largest number of bankruptcy protection requests on record, credit research firm Serasa Experian said on Wednesday, the latest symptom of the nation's most severe economic downturn in 25 years.

According to Serasa Experian's indicator of bankruptcies and judicial recovery requests, a total 627 requests were filed across Brazil in the first seven months of the year. That is the largest such number since the enactment of a law on bankruptcy proceedings in 2005.

During the same period last year, 476 bankruptcy protection requests were filed, Serasa said in a report.

Small companies led the tally with 323 bankruptcy requests in the period, followed by mid-sized firms with 174. About 130 large companies sought protection from creditors in the first seven months, Serasa said.

The latter included big engineering companies involved in a corruption scandal at state-controlled oil company Petróleo Brasileiro SA. Grupo Schahin SA, Galvão Engenharia SA and two other rivals have filed for bankruptcy protection since January as the scandal undercut their access to financing and compounded the impact of a flagging economy and a slumping currency.

Economists expect Brazil's economy, the largest in Latin America, to shrink this year at the fastest pace in 25 years. Companies across the country are grappling with dropping sales, margin compression, the highest borrowing costs in nine years and high dismissal costs, which will test their ability to stay current on their financial obligations, Serasa said in the report. (Reporting by Guillermo Parra-Bernal; Editing by Peter Galloway)