Braskem Idesa SAPI filed for Chapter 11 protection 18 August with the US Bankruptcy Court for the Southern District of Texas.

The Mexican petrochemicals producer submitted a prepackaged restructuring plan backed by a restructuring support agreement (RSA) signed by parties representing 75% of secured creditors. It features a USD 409m super-priority debtor-in-possession (DIP) financing facility, including USD 279m in new money, provided by majority shareholder Braskem SA.

The case, number 9:26-bk-90762, has been assigned to Judge Christopher Lopez. A first day hearing was set for today (18 August) at 2:30pm Central time.

The petition also includes the Braskem Idesa Servicios SA de CV and Braskem Idesa Ethane LLC subsidiaries. Braskem Idesa claims USD 3.6bn in debt, plus USD 180m in unpaid and accrued interest, related to payments it has ceased since November 2025.

 

The company

Formed in 2010, Braskem Idesa is a Mexican petrochemical company specializing in the production of polyethylene and ethylene products from ethane. It is 75% owned by Brazilian petrochemical firm Braskem SA, almost entirely through its Braskem Netherlands BV subsidiary. The remaining 25% is owned by Etileno XXI SA de CV, a wholly owned-subsidiary of Mexican petrochemicals firm Grupo Idesa. Idesa is owned by Capital Inbursa SA de CV, a subsidiary of Inbursa, a financial group controlled by Mexican magnate Carlos Slim.

Idesa has been controlled by Slim since a debt capitalization by Inbursa finalized in April 2023.

Co-petitioner Braskem Idesa Servicios is a wholly-owned subsidiary of Braskem Idesa, and Braskem Idesa Ethane is a wholly-owned subsidiary of Braskem Idesa Servicios.

Braskem Idesa was formed to develop Latin America’s largest petrochemical complex, Etileno XXI, in Nanchital in the Mexican State of Veracruz. This complex, representing an investment of USD 5.2bn, was inaugurated in April 2016. It has an annual production capacity of 1m tons of ethylene and polyethylene products.

Braskem Idesa is also a partner in a 50-50 joint venture with Rotterdam-based Advario Energy in the Terminal Química Puerto México (TQPM), an ethane storage terminal in Coatzacoalcos, Veracruz. The terminal has storage capacity for 54,000 tons of ethane, enabling an eventual 25% capacity expansion of the Etileno XXI complex. TQPM opened in May 2025 after an investment of USD 500m.

Mexico consumed 1m tons of high-density polyethylene and 645,000 tons of low-density polyethylene in 2025, according to the Mexican Chemical Industry Association. Total consumption of synthetic resins in Mexico was 7.4m tons in 2025, of which 5.6m tons was imported.

 

The debt

Source: Debtwire Credit Research

In 2019, Braskem Idesa sold USD 900m in 7.45% 2029 senior secured bonds, with Deutsche Bank as the trustee. It failed to make a scheduled interest payment due 19 November 2025 and a subsequent payment.

Braskem Idesa sold USD 1.2bn in 6.99% 2032 senior secured bonds in 2021, with Bank of New York Mellon as the trustee. It failed to make the 20 February interest payment this year.

The borrower signed a USD 95m senior secured term loan in April 2025 with Grupo Inbursa and other lenders. In October 2025, the loan was increased to USD 180m, and Braskem Idesa borrowed USD 34m under this extended amount. The total amount outstanding is now USD 129m, with an average effective interest rate of 11.1%.

Braskem Netherlands provided a working capital facility of up to USD 51m in March 2026, increased to USD 150m in August. There was USD 101m drawn as of the petition date. This has an average effective interest rate of 10.5%. 

Braskem Idesa also owes Braskem USD 67m under a secured facility.

In 2023, TQPM signed a project financing facility of up to USD 440m to support construction of an ethane import terminal at the port of Coatzacoalcos, Mexico. Eight international and Mexican lenders participated.

 

The descent

In its Chapter 11 materials, Braskem Idesa said cited “an exceptionally challenging environment driven by a prolonged petrochemical downcycle, compressed industry spreads, and constrained ethane supply in Mexico, which has increased the cost of feedstock and limited plant utilization,” in effect since 2H22. It needed to completely change the procurement process for feedstock, requiring significant fixed costs and much higher variable costs.

The troubles are closely linked to its relationship with the Mexican government and specifically Pemex. In 2010, Braskem Idesa signed a contract with the state-owned oil company for the supply of 66,000 barrels of ethane per day over the course of 20 years, as the basis for the construction of the Etileno XXI plant.

However, changes in natural gas prices due to the US shale gas revolution upended the supply contract’s assumptions, leaving Pemex with very unfavorable terms. After Etileno XXI’s operations started, Pemex immediately suffered from the contract – losing USD 667m by the end of 2020.

Pemex was required to pay severe penalties for each barrel below the 66,000 barrel per day quota that it provided. The government-owned firm was also responsible for the cost of transport of ethane to Etileno XXI as well as a penalty equivalent to the total value of the whole project in case the contract was annulled due to lack of ethane supply from the oil company.

Adding to the trouble, the Lava Jato corruption scandal involving Braskem’s majority shareholder at the time, Odebrecht, engulfed Pemex, leading to Emilio Lozoya, a Pemex director between 2012 and 2016, being arrested in 2020 for taking bribes from the Brazilian conglomerate.

In 2018 Mexico’s energy policy changed significantly with the election of left-wing nationalist President Andres Manuel Lopez Obrador, whose vision of Pemex’s strategic role in achieving energy sovereignty brought scrutiny to all private contracts in Mexico’s energy sector.

These factors culminated in the Mexican government insisting on renegotiating the Etileno XXI contract in 2021, after shutting down the natural gas supply required for firing up the plant.

The renegotiated contract significantly changed the pricing of Braskem Idesa’s ethane supply, from 30% below international market rates to international market rates. It resulted in a reduction of ethane supply obligations of Pemex from 2021 to March 2024 and the disappearance of these supply obligations from then onwards. The updated agreement also posited government support for the construction of the ethane import terminal to resolve supply problems.

Braskem Idesa issued the USD 900m 7.45% 2026 notes in November 2019. In October 2021, it sold the USD 1.2bn in 6.99% 2032 bonds to repay USD 1.3bn in senior secured project finance debt. Additionally, in 3Q22 Braskem Idesa took on the USD 150m syndicated term loan due October 2026.

Around the time of the signing of the new Pemex contract in 2021, the gobal polyethylene cycle peaked before entering a prolonged period of decline and then stagnation.

As the polyethylene cycle cooled down, a USD 300m debt capitalization allowed Mexican bank Inbursa to take control of Idesa, owner of a 25% stake in Braskem Idesa, in April 2023 after being approved in November 2022. It appeared that Slim – already building out his presence in the Mexican energy sector through his infrastructure conglomerate, Grupo Carso – might be poised to eventually seek control of Braskem Idesa.

The USD 150m term loan issued by a syndicate of banks in 2022 was refinanced by Inbursa in 1Q25 for USD 95m. In August 2025 Debtwire reported that Idesa was discussing increasing its stake in Braskem Idesa to gain control of the JV and the Inbursa term loan was upsized by an uncommitted USD 85m in October 2025. Slim also had come to own at least USD 300m of Braskem Idesa bonds.

Between 1Q25 and 3Q25, plant utilization declined from 79% to 47%, mostly due to a maintenance operation.

Braskem Idesa’s problems were compounded by shareholder Braskem being affected by the same compression of petrochemical spreads that it itself suffered. Braskem hired restructuring advisors in September 2025 and suffered ratings downgrades immediately afterwards. Braskem is preparing a restructuring of its own, operating under precautionary court protection in Brazil.

Braskem Idesa retained Lazard, Cleary Gottlieb Steen & Hamilton and Sainz Abogados, also in September 2025, to review its capital structure and liquidity conditions.

The Mexican petrochemical company failed to make a scheduled interest payment on its USD 950m 7.45% 2029 bond due 19 November 2025, stating it was “focused on working to achieve a sustainable long-term capital structure.” It then exchanged restructuring proposals with bondholders.

Braskem Idesa failed to make 20 February interest payment on 2032 bonds, and began discussing a DIP facility with creditors, to be used in an eventual US Chapter 11 process.

It received USD 42m in emergency funding from Braskem through a facility to support manufacturing and distribution in August 2025, and this was increased in March 2026 by USD 25m, according to the Chapter 11 documents.

Also in March, the company received USD 51m in emergency working capital funding from Braskem, which was amended 27 May to expand to USD 101m and again on 15 August to add an additional USD 49m if necessary.

Recent months have featured “complex” negotiations for a DIP financing involving the ad hoc group, Braskem and Inbursa, according to the Chapter 11 documents. In the end, however, Braskem, aided by improved market conditions, decided to offer post-petition financing on its own.

 

The prepackaged plan and the Chapter 11 case

Braskem Idesa will eliminate USD 920m in debt through the Chapter 11 process, and aims to emerge with the Etileno XXI facility operating at its intended levels of production.

The debtor’s most significant liquidity need is to normalize working capital and increase production at the complex. Upon entry of the interim order, it expects to quickly deploy an initial draw of USD 230m to increase production.

The plan calls for a USD 409m senior secured superpriority DIP facility. It includes new money loans of up to USD 279m, USD 230m of which will be immediately available upon the interim order and USD 49m upon the final order. There is also the roll-up of approximately USD 129.89m in eligible emergency Braskem bridge facility obligations, with USD 103.91m rolled-up following entry of the interim order and USD 25.98m rolled-up following entry of the final order.

The new money loans and roll-up loans feature annual interest of 10%, payable in kind and commitment fees of 0.5% paid in-kind.

Braskem will receive 33.3% of the reorganized Braskem Idesa equity, in exchange for providing approximately USD 486m in new money financing and claims equitization. This consists of the roll-up of USD 131m of support financing provided prior to the Chapter 11 petition, USD 283m of the new money DIP financing, and a new money equity contribution of USD 71m.

Bondholders will receive their pro-rata share of 33.3% of the reorganized equity in exchange for USD 825m of their claims. The remaining portion of their claims will be exchanged for exit notes. Their equity will be held through a special-purpose vehicle (SPV), and the holders will receive 15-year 5% PIK notes issued by this SPV.

Existing equity holders will receive 33.3% of the reorganized equity.

Braskem Idesa will issue USD 1.6bn in first-lien exit notes, to the bondholders and to the secured term loan lenders. The 9.25%/11.25% PIK option notes are secured by priming liens on all assets of the borrower and guarantors.

Unsecured claimholders are to be paid in full.

 

The Advisors

Source: Court Documents