Prosecutors urge freeze on Braskem's $400M Mexico unit injection

The São Paulo State Public Prosecutor's Office recommended freezing a capital injection of more than $400 million by Braskem into its Mexican subsidiary, Braskem Idesa. The injection is part of a Chapter 11 restructuring plan filed in the United States in August.

The recommendation follows a petition filed by Braskem's largest creditor group, which holds about $7 billion in foreign bonds. Creditors argue that the capital will be converted into equity and that Braskem's total financial commitment could reach $800 million rather than the initial $476 million. A US court hearing on the Braskem Idesa restructuring plan is scheduled for Thursday, September 24.

Prosecutors stated that the transfer is not illegal, but requested that it be halted until Braskem delivers a detailed report in Portuguese. The report must explain cash impacts, risks, approval records, potential conflicts of interest, and whether Petrobras credit was used, as Braskem negotiates an overall debt restructuring of over $11 billion.

The prosecutor's office also questioned the 39.5% creditor quorum required for out-of-court restructuring in Brazil. It noted that Braskem Netherlands and Braskem America Finance do not meet the minimum one-third threshold on their own and recommended naming a court administrator to assist the judge.