• DIP lender Braskem SA involved in Brazilian restructuring proceedings and Chapter 15 case
• DIP loan repayment tied to 33.3% of new equity, with bondholders and shareholders receiving 66.6%
• Braskem SA’s restructuring proceedings may impact DIP loan obligations

Mexican petrochemical company Braskem Idesa (BAKIDE) and two affiliates entered Chapter 11 on 18 August with a prearranged restructuring plan that is based on a restructuring support agreement (RSA) signed by creditors holding 75% of the company’s secured debt. The debtors plan to fund their Chapter 11 cases with USD 408.9m in DIP financing. BAKIDE’s DIP loan stands out because the DIP lender, which is also its parent company, commenced an extrajudicial recovery proceeding yesterday (24 August) in Brazil, and is currently a foreign debtor in a Chapter 15 case.

In this article, the Debtwire legal analyst team takes a look at the DIP facility, how the DIP loan will be repaid under the plan, and the extent to which the DIP lender’s restructuring proceedings could affect the DIP loan. We also discuss other cases where DIP loans were provided by non-debtor affiliates and the reasons why certain debtors keep their DIP loans in house.

BAKIDE’s prepetition funded debt 

BAKIDE’s DIP loan is best understood in the context of its corporate structure, commercial agreements with its largest shareholder, and its funded debt because, as discussed below, BAKIDE’s shareholders and affiliated entities hold the majority of its prepetition funded debt.

BAKIDE was incorporated in Mexico in April 2010 as a joint venture between Braskem SA, a Brazilian petrochemicals company, and Grupo Idesa, a Mexican petrochemicals company, to bid on a long-term raw material contract with the Mexican government (which it ultimately won) and build a petrochemical complex.

BAKIDE’s largest shareholder is Braskem Netherlands, which holds 74.99% of its common shares. Braskem Netherlands is a wholly-owned subsidiary of Braskem SA, which holds 0.01% of BAKIDE’s common shares. BAKIDE’s other shareholder is Etileno XXI SA de CV (Etileno XXI), a Mexican corporation that, as of the Chapter 11 petition date, held 25% of BAKIDE’s common shares. Etileno XXI is a wholly-owned subsidiary of Grupo Idesa, which is itself a subsidiary of Capital Inbursa SA de CV, a subsidiary of a Mexican financial conglomerate (Inbursa, and together with Inbursa’s affiliates, the Inbursa Group).

Source: Braskem SA Extrajudicial Recovery Petition

According to the first day declaration of Ryan Omohundro, Managing Director at BAKIDE’s financial advisor Alvarez & Marsal, BAKIDE is a party to a supply agreement and an open order quantity agreement with Braskem Netherlands. As of the petition date, BAKIDE owed Braskem Netherlands approximately USD 120m under the supply agreement.

In addition to that debt, BAKIDE entered Chapter 11 with nearly USD 3.6bn in funded debt.

Deutsche Bank Trust Company Americas is the indenture trustee on BAKIDE’s 2029 senior secured notes and The Bank of New York Mellon is the indenture trustee on BAKIDE’s 2032 senior secured note.

Banco Inbursa (a member of the Inbursa Group) is the lender under BAKIDE’s USD 180m senior secured term loan, and Braskem Netherlands is the lender under BAKIDE’s USD 150m working capital facility. Braskem Netherlands is also a lender under a manufacturing and distribution agreement with BAKIDE. The approximately USD 67m outstanding under that agreement, as of the petition date, may be satisfied either by delivery of products or repayment. BAKIDE is also a borrower under several unsecured, subordinated loan facilities provided by its shareholders, Braskem SA, Braskem Netherlands, and Etileno XXI.

In short, a significant portion of BAKIDE’s prepetition funded debt was provided by its shareholders and a member of the Inbursa Group. Also, one such shareholder, Braskem Netherlands, is a party to two additional commercial agreements with BAKIDE. In this way, BAKIDE is not particularly different from other Chapter 11 debtors who obtain DIP financing from prepetition lenders.

BAKIDE’s DIP facility

The debtors’ plan to fund their Chapter 11 cases with a nearly USD 409m senior secured DIP facility, which includes up to USD 279m in new money loans and a roll-up of approximately USD 129.89m in prepetition funded debt. As is often the case in Chapter 11 scenarios, the debtors’ obligations to prepetition lenders are secured by liens on substantially all of the debtors’ assets and any proceeds thereof (with the exception of the debtors’ equity interests in one company), making it more difficult to obtain financing from a third party outside of the existing capital structure.

Although the DIP financing motion provides that the new money DIP loan will be provided by Braskem Netherlands and Braskem America or their affiliate designees, according to debtors’ counsel, Richard Cooper of Cleary, Gottlieb, Steen & Hamilton, Braskem SA will provide the DIP loan.

BAKIDE’s Chapter 11 plan provides that DIP lenders will be repaid with 33.3% of new equity to be issued by the reorganized BAKIDE. Bondholders and existing shareholders will each receive the remaining 33.3% of the reorganized equity.

DIP lender debtor

While the fact that BAKIDE’s parent company, Braskem SA, is providing the DIP loan makes this DIP loan somewhat unique, the situation is not completely uncommon given that BAKIDE’s funded debt is mostly held by shareholders and entities within the corporate structure. This particular DIP loan stands out, nonetheless, because the DIP lender – Braskem SA – is currently involved in not one, but two court-supervised restructuring proceedings in Brazil; a situation that is exceptionally rare in Brazil’s restructuring landscape. It is also a foreign debtor in a Chapter 15 case.

In late April 2026, NSP Investimentos (NSPINV), the holding company of Brazilian conglomerate Novonor, commenced a judicial recovery proceeding before the First Court of Bankruptcies in São Paulo to facilitate a consensual sale of its controlling stake in Braskem SA to local investment firm IG4. The parties sought and obtained court approval to sell NSPINV’s interest free and clear of liabilities.

In late June 2026, Braskem’s creditor Banco Safra appealed the approval order, arguing that the transaction lacked a competitive bidding process and challenging the valuation agreed upon by the parties. Although a São Paulo appellate court denied Safra’s request for an injunction to suspend the sale approval, the merits of the appeal have yet to be decided.

Meanwhile, on 24 June 2026, Braskem SA and five other affiliates of the group, including Braskem Netherlands, requested a precautionary measure with the Second Court of Bankruptcies in São Paulo to suspend creditor enforcement actions and protect operations during a court-supervised mediation process. On 26 June, that court awarded the company a 60-day injunction preventing debt collection efforts. On the same day, Braskem SA sought Chapter 15 recognition of the Brazilian case. It was awarded provisional relief four days later.

Yesterday (24 August), Braskem SA asked the Brazilian bankruptcy court to convert the precautionary measure into an extrajudicial recovery proceeding. The filing came along with a standstill-driven[1] debt restructuring plan supported by 39.6% of impaired creditors, which preserves Braskem’s ability to provide funding to BAKIDE through a carve-out for “Braskem Idesa Investments,” exempting qualifying loans, capital contributions, and other funding arrangements from certain restrictions applicable to intercompany investment and financing transactions. As a result, Braskem’s 24 August extrajudicial recovery filing does not appear, at least initially, likely to impair its ability to perform its obligations as the DIP lender.

Other shareholder-funded DIP loans

Although DIP loans are typically provided by third-party prepetition lenders, Chapter 11 debtors have obtained DIP loans from shareholders and affiliates under various circumstances, as outlined in the following table.

As discussed in the table above, Chapter 11 debtors have received DIP financing from insiders either when those insiders held a significant portion of the company’s prepetition funded debt or when third-party prepetition lenders would not agree to provide additional financing. While BAKIDE is no different in this regard, as its shareholders and commonly-owned entities held a significant portion of its prepetition funded debt, BAKIDE stands out because its DIP lender is the subject of a court-supervised extrajudicial recovery proceeding in Brazil, and a Chapter 15 debtor.

Braskem SA’s ability to provide the DIP loan

Inspired by a US prepackaged Chapter 11 case, a Brazilian extrajudicial recovery proceeding enables a distressed company to enter bankruptcy with a restructuring plan in place that is supported by holders of at least 50% of impaired claims. Once confirmed by a Brazilian court, a plan would be binding on all remaining creditors. Brazilian law also allows a distressed company to commence an extrajudicial recovery proceeding with support of only one-third (33.3%) of impaired creditors, provided that the company must show the remaining quorum support within 90 days following the filing.

Unlike in a Chapter 11 case where section 363 of the Bankruptcy Code requires a debtor to obtain court approval before entering into transactions that are outside the ordinary course of a debtor’s business – like providing a USD 279m new money loan to its subsidiary – Braskem SA is not subject to a similar requirement in its extrajudicial recovery proceeding. The fact that Braskem SA is subject to a Chapter 15 case, however, presents an additional wrinkle. Although Braskem SA only recently commenced its extrajudicial recovery proceeding and has not yet been recognized as a foreign main proceeding, that is the goal of the Chapter 15 case and a likely outcome. Under section 1520(a)(2) of the Bankruptcy Code, once a foreign proceeding is recognized as a foreign main proceeding, section 363 applies to a transfer of an interest of the debtor in property that is within the territorial jurisdiction of the US to the same extent that it would apply to property of an estate. Thus, court authorization should not be required to extend Braskem SA’s DIP loan unless the funds extended are within the territorial jurisdiction of the US. Typically, section 1520(a)(2) has been applied to sales of assets located in the US, and under the circumstances, we would not expect it to apply to Braskem SA’s DIP loan to a BAKIDE, a Chapter 11 debtor. We note, however, that this Bankruptcy Code provision could serve as a hook (albeit not a strong one) to creditors looking to challenge the DIP loan. It is also worth noting that while Braskem SA’s Chapter 15 case is pending before Judge Michael Wiles in the US Bankruptcy Court for the Southern District of New York, BAKIDE’s Chapter 11 case is pending before Judge Christopher Lopez in the US Bankruptcy Court for the Southern District of Texas. Accordingly, the Chapter 15 and Chapter 11 cases are not pending before the same judge, or even in the same court or judicial district.

Related Links:

Braskem Idesa Plan Profile
Braskem Idesa Case Profile
Extrajudicial Recovery Petition: Braskem SA (in Portuguese)
Extrajudicial Recovery plan: Braskem
Debtwire Dockets: Braskem Idesa
Debtwire Dockets: Braskem SA (Chapter 15)
Debtwire Restructuring Database: Braskem Idesa
Debtwire Restructuring Database: Braskem NSP Investimentos
Debtwire Legal Analysis: Braskem Idesa
Debtwire Legal Analysis: Braskem SA
Debtwire Shareholder Profile: Slim Family

Prior to joining Debtwire, Sara was a law clerk to two judges in the United States Bankruptcy Court, S.D.N.Y. and practiced in the Financial Restructuring Group at Clifford Chance, where she represented financial institutions (as secured and unsecured creditors, defendants in adversary proceedings, and participants in DIP financings) in high-profile restructurings. She also represented foreign representatives in Chapter 15 cross-border cases.

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 article should not be relied upon to make investment decisions. Furthermore, this article 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.

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[1] The plan provides solely for a standstill agreement, with effective debt restructuring measures to be later unveiled via an amended proposal.