A Wednesday filing shows three Bracebridge-affiliated funds asked a court to start an involuntary Chapter 11 case for Braskem America Finance Company. That entity is the borrower behind approximately $587 million of bonds due in 2041, and the petitioning creditors report owning $272 million of those securities.
The creditors based their action on the claim that Braskem has generally not been paying obligations when they are due. Under the law, the borrower can either agree to the bankruptcy or contest the petition.
Since August, Braskem has sought an out-of-court deal to address about $11 billion in liabilities. Earlier this month, another plan was rejected by creditors; it featured a conditional shareholder pledge of roughly $1 billion to support a follow-on equity sale, contingent on the company securing a substantial reduction of debt as a result of the restructuring. Reports indicate Braskem is developing a new proposal with a group of bondholders in an effort to avert a full bankruptcy.
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Two forks to track: whether the borrower consents to the case or fights it, and whether talks with bondholders yield another proposal. Keep an eye on the moving parts that define the stakes here - the $587 million 2041 bond stack, the roughly $11 billion total debt, and the shareholders' $1 billion backstop that only kicks in if debt is cut significantly through a restructuring.
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