In an interview published on the BP Money portal, our lawyer specializing in corporate restructuring, Dr. Camila Crespi, comments on the situation of Casas Bahia after achieving debt negotiation.

The year 2023 has been a year of many uncertainties for the Casas Bahia Group (BHIA3). Living with negative quarterly balance sheets, store closings and dismissal of employees, the retailer has viewed with fear the possibility of filing for bankruptcy protection, something that many companies have already done this year, such as Americanas (AMER3).

In yet another attempt to get some breathing room in its cash flow, Grupo Casas Bahia carried out a share offering in September, in which it raised R$622 million, compared to the expected R$980 million. In one week, the share price fell by 38%, with the stock going from R$1.20 to R$0.73.

With the panic surrounding the retailer's finances, many investors have been asking themselves: is this the end of the Casas Bahia Group? According to Lucas Lima, an analyst at VG Research, the company still has a chance of recovering, as most of its debts are long-term.

“The possibility of bankruptcy exists as we project weak results as reported in recent quarters. However, in 2022, the company renegotiated the maturities of its debts, that is, most of what was in the short term ended up going to the long term. Today, around 34% are in the short term and 66% in the long term,” he said.

“Currently, Via has available cash of R$870 million, without considering advances on accounts receivable and credit cards. Therefore, there is a final breath for the Casas Bahia Group to try to organize its house and have a sustainable business model in the long term,” Lima added. BP Money.

Another point highlighted by the VG Research analyst is the recent drop in inflation and the basic interest rate. According to him, with the improvement of the Brazilian economy, the demand for durable goods may increase, benefiting the retailer's cash flow.

“Another “lucky” point for the company is that inflation has fallen significantly and the interest rate reduction cycle has begun, so demand for durable goods may grow again in the second half of the year, helping the company generate cash and reduce debt,” he pointed out.

How can the Casas Bahia Group escape this crisis?

The market has not been very confident in the retailer's recovery. In September, the percentage of leased shares of Grupo Casas Bahia soared, as did the rate paid by investors for the leases. According to data from Economatica, the percentage of the free float leased reached more than 26%.

According to Economatica, the average rental rate reached more than 279.5% of the share price. Therefore, to carry out a transaction of this type, an investor would be willing to pay almost three times the price of the stock to maintain the position.

For Lima, the retailer, in order to regain the trust of investors and pay off its debts, will have to remodel its size and operations.

“The company has been burning a lot of working capital in stores that are not profitable, so reducing the number of stores will be an important part of the company’s restructuring plan. In addition, it needs to sell off a stock of non-core and tail products that have extremely low margins. The company needs to focus on becoming smaller and more profitable,” said the analyst.

What if the Casas Bahia Group asks for RJ?

If the Casas Bahia Group opts to file for judicial recovery, Camila Crespi, a lawyer at Luchesi Advogados and a specialist in corporate restructuring, explains that the retailer will be able to suspend all actions brought by creditors for 180 days, as a way of renegotiating its debts.

“If the company opts for judicial recovery, one of the immediate benefits of granting the processing of the process is the suspension of all actions and executions that are being processed against the company for debts that are subject to judicial recovery and, further, asset protection for the initial period of 180 days, which can be extended for the same period”, he stated.

“The Stay period, as it is called, protects the company from any type of expropriatory measures by creditors, precisely to enable better debt restructuring and negotiation with creditors,” added Crespi.

In a more pessimistic scenario, involving the bankruptcy of Grupo Casas Bahia, Grasiele Roque da Silva, a specialist in judicial recovery at Benício Advogados, says that the current administrators would be removed from the companies and replaced by a judicial administrator.

“In the unlikely event that the Casas Bahia Group is declared bankrupt, the consequences will be the removal of the administrators, the appointment of a judicial administrator who will have to plan and execute the collection of assets, as well as present a distribution plan for payments to creditors, and early maturity of debts,” reported Silva.

Source reproduction: BP Money website