Brazil’s Fictor Holding Files for Bankruptcy Amid Fallout From Failed Acquisition Attempt

Fictor Holding filed for bankruptcy protection in Brazil, with its holding company and a financing firm seeking to restructure 4 billion reais (about $763 million) in debt, Bloomberg reported Monday (Feb. 2).

The Brazilian firm’s other companies, including Sao Paulo Stock Exchange-listed Fictor Alimentos, are not included in the filing, according to the report.

Fictor said it wants to pay creditors the full amount it owes but wants to block them from forcing it to pay for 180 days, the report said.

The bankruptcy came about three months after the liquidation of Banco Master, according to the report. That bank was ordered to liquidate by Brazil’s central bank in November, a day after Fictor announced it would try to buy Banco Master, the report said.

Fictor said it is facing a “momentary liquidity crisis” caused by the liquidation of the bank, due to a reputational crisis resulting from the incident, per the report.

It was reported in November that Brazil’s central bank halted the operations of Banco Master and named a liquidator to handle creditor claims and sell assets. On the same day, police arrested the bank’s controlling shareholder, according to the report.

Banco Master had struggled for months with liquidity pressures after growing rapidly by selling high-yield debt through investment platforms, the report said.

Fictor and unnamed investors from the United Arab Emirates had said hours before the liquidation that they agreed to buy Banco Master, per the report.

It was reported Jan. 29 that BRB, a Brazilian state-run bank, may set aside more than 5 billion reais (about $970 million) to cover its transactions with Banco Master.

BRB said that any estimate of capital needs will be based on central bank estimates and an independent investigation and that it already has a capitalization plan designed to address any shortfalls, according to the report.

BRB had planned to acquire Banco Master but was blocked by the central bank in September amid Banco Master’s liquidity crisis. BRB had also been buying securities from the bank, and ongoing investigations have found that some of those securities may have been tied to nonexistent assets, per the report.