Expectations that Mexican petrochemical Braskem Idesa will commence an in-court restructuring have been building since early September 2025, when the company announced the engagement of legal and financial advisors to review its existing capital structure and liquidity conditions. Over the last few months, the disclosure of certain notable events – including defaults on bond coupon payments due on 18 November 2025 and 20 February 2026 – has further fueled speculation that a bankruptcy filing could be imminent.

In light of this possibility, Debtwire’s legal analyst team reviews the in-court restructuring mechanisms available to Braskem Idesa and explains why a Chapter 11 case could be the most likely path to effectively addressing the company’s funded debt, which is summarized in the chart below.

Source: Debtwire’s Restructuring Database

Advisory hires, coupon payment defaults point to a possible near-term filing

Braskem Idesa is jointly owned by (i) Brazil’s Braskem, its controlling shareholder currently holding 75% of the equity, and (ii) Mexico’s Idesa,[1] which holds 25% of equity. The Mexico-based petrochemical firm has reportedly been in talks with lenders for several months after failing to meet interest obligations on its USD bonds maturing in 2029 and 2032 amid liquidity pressure and lower production utilization.

On 8 September 2025, Braskem Idesa disclosed that it had retained financial advisor Lazard, and legal advisors Cleary Gottlieb and Sainz Abogados, to assist in evaluating a broad range of financial and strategic options. Shortly thereafter, its 2029 and 2032 notes declined by up to seven points, and credit rating agencies S&P and Fitch downgraded the company, noting that such advisory engagements can signal an imminent restructuring or other debt actions potentially adverse to bondholders.

Despite these events, it was not initially clear whether Braskem Idesa would pursue an in-court restructuring. There was also the possibility that the advisors had been retained to assist Inbursa (i.e., Carlos Slim) in negotiations to increase its indirect stake in the company by reaching an agreement on the petrochemical company’s equity valuation, with the goal of ultimately transferring control of Braskem Idesa to Idesa from Braskem.

However, throughout the last months several developments have fueled market speculation that a bankruptcy filing may be imminent. In late September 2025, for example, an ad hoc group of bondholders retained Houlihan Lokey and Davis Polk as its financial and legal advisors. In mid-November, the company failed to pay a USD 34m coupon on its USD 900m 7.45% notes due 2029. Additionally, in early December it entered into debt restructuring negotiations with the ad hoc group, but those discussions stalled in early February 2026. A few weeks later, the company also failed to make an interest payment on its 6.99% senior secured notes due 2032, as mentioned above.

Selecting venue

If expectations regarding the commencement of an in-court restructuring by Braskem Idesa to address its bond debt in the short term ultimately materialize, the first and most obvious venue would be one of the bankruptcy courts in Mexico, where the petrochemical firm is located and conducts most of its operations. In this case, Braskem Idesa would be following the same debt restructuring strategy recently adopted by domestic broadcaster TV Azteca, which commenced a concurso mercantil in mid-March 2026 with the First Federal District Court for Bankruptcy Proceedings in Mexico City.

Under a concurso proceeding, a local court could grant the company a stay of individual debt collection measures, potentially followed by recognition under Chapter 15 of the US Bankruptcy Code, which together would provide Braskem Idesa with temporary relief and additional time to engage in a new round of debt restructuring negotiations with bondholders. In practice, however, the situation may be more complex, especially given the uncertainty surrounding the Mexican bankruptcy system.

The creation of specialized bankruptcy courts, in 2022, was expected to expedite concurso proceedings and provide them with more predictability. A judicial reform in the country’s legislation in September 2024, however, dashed those expectations. Among other things, the legislation affected the election of judges, led to a strike that closed courts and ultimately resulted in (i) the election of inexperienced judges and (ii) a heavy burden of backlog. In addition, the ballot proceeding itself was marked by much confusion.

As a result, distressed companies may lose confidence in Mexican bankruptcy courts and instead pursue out‑of‑court restructurings or shift proceedings to jurisdictions like the United States or the United Kingdom

In January 2026, Braskem Idesa reportedly considered changing the governing law of its bonds to UK law from US law in an effort to facilitate potential recognition of an agreement with the ad hoc bondholder group, which would be implemented through a scheme of arrangement. However, an agreement was never reached, and when bond debt renegotiations resumed with the ad hoc group signing a non-disclosure agreement in late February, discussions centered around either a USD 350m or a USD 250m potential debtor-in-possession (DIP) term loan, which could imply the commencement of a US Chapter 11 case.

US DIP financing availability

Braskem Idesa’s potential strategy of pursuing an in-court restructuring in the US, rather than in Mexico or the UK, could be driven in significant part by the availability of DIP financing under US law, which distressed companies often require to continue operations during a restructuring and preserve and maximize the asset value.

The US Bankruptcy Code has clear, well-developed provisions applicable to both prepetition secured lenders (e.g., provisions concerning adequate protection afforded to secured prepetition lenders) and DIP lenders, affording them priority payment privileges and the ability to prime existing liens. Also, DIP loans are frequently provided by prepetition lenders, and it has become common for these lenders to roll up a portion of their prepetition debt into the DIP financing, thereby elevating the repayment priority (and sometimes the lien priority) of that debt in the bankruptcy case. These incentives can benefit both debtors and their prepetition lenders that provide DIP financing.

In terms of security, DIP loans are often secured by first-priority liens on a debtor’s unencumbered assets and the proceeds thereof, and sometimes by encumbered assets, subject to certain permitted prior liens. In some cases, DIP financing can be secured by liens on the proceeds of avoidance actions. Section 364(c) of the Bankruptcy Code authorizes a debtor to incur secured DIP financing if it establishes that (i) there is a need for the financing, (ii) the financing is reasonable, and (iii) the debtor is unable to obtain an unsecured DIP loan allowable as an administrative expense under the Bankruptcy Code.

Under section 364(d) of the Bankruptcy Code, a debtor may obtain DIP financing that is secured by a senior or equal lien on its property that already is subject to a lien if the debtor demonstrates that it is “unable to obtain such credit otherwise” and “there is adequate protection of the interest of the holder of the lien on the property of the estate on which such senior or equal lien is proposed to be granted.” Such adequate protection provided to prepetition secured lenders can include (i) post-petition interest payments, (ii) the granting of replacement liens on the affected collateral, and (iii) reimbursement of the lenders’ professional fees, among other things.

In addition to roll-ups and adequate protection packages, fees associated with the provision of DIP loans also incentivize DIP lenders.

Chapter 11 appears to be the best alternative

In recent years, these Bankruptcy Code provisions governing DIP financing, combined with the experience of US bankruptcy courts and the well-developed market for post-petition funding, have made the US an attractive venue for non-US companies considering bankruptcy, as highlighted in the chart below:

In most of these cases, DIP financing transactions have played a pivotal role in providing distressed companies with fresh money to continue operating as a going concern throughout the restructuring and ultimately emerge from bankruptcy. For instance, in late May 2025 Brazilian airline Azul obtained court authorization to access USD 250m of USD 1.6bn in DIP financing only one day after filing for bankruptcy. Similar speed was observed in the Chapter 11 case of Gol Linhas Aereas, which was also authorized to access part of its USD 950m DIP facility a few days after commencing that proceeding, in December 2023. Chapter 11 debtors seeking DIP financing usually obtain interim access to DIP funds at a “first day hearing,” which typically takes place on the day of, or soon after, the bankruptcy filing.

By contrast, in high-profile in-court restructuring proceedings initiated by Mexican companies in their home-country courts, post-petition financing transactions have rarely – if ever – been used as a restructuring tool, and many of those companies continued to struggle to survive and maintain operations during concurso proceedings, which commonly take several years to reach final solution, as illustrated in the chart below.

Considering both the features of Mexican concurso proceedings and US Chapter 11 cases, as well as Braskem Idesa’s current situation, the US appears to be the most likely venue for an in-court restructuring given its greater efficiency, predictability, and speed compared to Mexico. If Braskem Idesa pursues a Chapter 11 case, the availability of US DIP financing will likely have been a decisive factor in the company’s choice to address its defaults through US bankruptcy proceedings instead of initiating a process in Mexico.

Related links:

Debtwire Restructuring Database: Braskem-Idesa
Debtwire Shareholder Profile: Slim family
Braskem-Idesa low utilization rate puts pressure on DIP agreement – Credit Report

Arthur Almeida is a former restructuring attorney. Prior to joining Debtwire as a Legal Analyst, he practiced with Passos & Sticca Advogados Associados, and worked in the legal department of Banco Fibra S.A. Arthur’s experience includes participating in major civil litigation on credit recovery, representing creditors such as banks and financial institutions in high-profile restructurings. He obtained his Master’s in Commercial Law from Universidade de Sao Paulo (at which he is also a researcher in the Insolvency Law Study Group – GEDEC), and his LL.M in Financial and Capital Markets Law from Insper Instituto de Ensino e Pesquisa.

This report should not be relied upon to make investment decisions. Furthermore, this report is not intended and should not be construed as legal advice. ION Analytics does not provide any legal advice, and clients should consult with their own legal counsel for matters requiring legal advice. All information is sourced from either the public domain, ION Analytics data or intelligence, and ION Analytics cannot and does not verify or guarantee the adequacy, accuracy or completeness of any source document. No representation is made that it is current, complete or accurate. The information herein is not intended to be used as a basis for investing and does not constitute an offer to buy or sell any securities or investment strategy. The information herein is for informational purposes only and ION Analytics accepts no liability whatsoever for any direct or consequential loss arising from any use of the information contained herein.

Endnote:

[1] Mexican billionaire Carlos Slim’s Inbursa controls Idesa with a 94% stake, and acquired at least USD 300m of Braskem Idesa 2027 bonds.