Brazil's Oi seeks creditor protection for unit in Dutch court -sources
By Guillermo Parra-Bernal and Ana Mano SAO PAULO, Aug 9 (Reuters) - A Dutch court has accepted a request by Brazilian phone carrier Oi SA to put one of its Netherlands-based units under protection from creditors, two people with direct knowledge of the situation said on Tuesday, handing creditors a victory as they seek to recoup billions of dollars in losses. According to the sources, who requested anonymity since the matter is confidential, Oi's request for "suspension of payment" in an Amsterdam bankruptcy court allows for an independent trustee to be appointed. The suspension creates a standstill for payments to creditors for companies in the Netherlands. One of the sources said the trustee, who will look after the interests of creditors during the unit's bankruptcy proceedings, will be lawyer Jasper Berkenbosch of law firm JonesDay. The court's decision is a "huge development because it forbids Oi's management from representing the company without the trustee's consent," said the first person. In recent months, several creditors including Aurelius Capital Management LP asked the Dutch court to start bankruptcy proceedings against Oi Brasil Holdings Coöperatief UA, as the Oi unit is formally known. Under Dutch law, if the court approves the petition, the trustee will be appointed to defend the interests of creditors. Rio de Janeiro-based Oi and New York-based Aurelius declined to comment. Efforts to confirm the decision with officials at Amsterdam's commercial court were unsuccessful. Berkenbosch of Jones Day could not be contacted for comment. Oi, Brazil's fourth-largest wireless carrier and the largest fixed-line operator, filed in June for creditor protection in a Rio de Janeiro court to restructure 65.4 billion reais ($21 billion) in debt. The ruling makes it tougher for Oi to protect existing shareholders from potential heavy dilution by bondholders. It also gives more say to bondholders of Oi Brasil Holdings and Portugal Telecom International Finance Co, both Dutch-based subsidiaries of Oi, during reorganization talks, said investors such as Paolo Gorgó. Both subsidiaries issued a combined $6.33 billion in bonds outstanding. The ruling means Oi will have to deal with two different in-court reorganization processes in two different countries, a setback for the company, the sources said. Apart from participating in the proceedings, the trustee will investigate Oi Brasil Holdings' prior and current management teams and enforce the company's claims against parent Oi and other affiliates, the court said in June. ($1 = 3.1555 Brazilian reais) (Additional reporting by Toby Sterling in Amsterdam; Editing by James Dalgleish)
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