• Court denied Brazilian telecom’s request for urgent asset sales
• Decision represents additional step towards seemingly unavoidable liquidation
• Appellate court to resume ruling on liquidation appeals soon

The court overseeing Oi’s judicial recovery process denied a request to authorize the expedited sale of isolated business unit (UPI)[1] Soluções, court documents dated 27 July 2026 show. The decision marked another step toward liquidation for the Brazilian telecom services provider, an outcome that appears increasingly likely.

On 20 July, Oi sought permission to move forward with an auction in which it would be allowed to accept the highest bid for UPI Soluções regardless of the amount offered, despite a legal opinion issued by the Rio de Janeiro State Public Prosecutor’s Office (MPRJ). The opinion recommended, before the first stage of the auction, that bids below 50% of the asset’s appraised value should not be considered acceptable. During an auction hearing held 18 June, it was confirmed that no bids had been submitted for the acquisition of UPI Soluções in the first stage of the competitive sale process.

In its motion seeking urgent measures to facilitate the sale of the asset, Oi argued that the rapid inflow of new financial resources was essential to avoid severe systemic consequences not only for the company, but also for tens of millions of Brazilian citizens and the public administration as a whole. In the same petition, the company requested authorization to carry out layoffs and defer severance payments until a liquidity event occurs, such as the sale of UPI Soluções, or the completion of the sale of UPI V.tal to Banco BTG Pactual. That transaction is suspended pending bondholder appeals.[2]

Oi further argued that a lack of liquidity could compromise the provision of several essential telecom-related public services, including services supporting (i) the presidential elections scheduled for October 2026; (ii) the Brazilian judiciary; (iii) lottery outlets that serve as payment points for social benefits; (iv) landline telephone services; and (v) municipalities throughout the country.

In her decision, however, Judge Simone Gastesi Chevrand of the 7th Corporate Court of the Judicial District of Rio de Janeiro found that Oi’s apparently irreversible financial distress did not justify bypassing legal requirements applicable to the sale of its remaining assets in an effort to address its immediate liquidity crisis. As a result, she ruled that none of the company’s requests should be granted until both (i) the MPRJ and (ii) the court-appointed watchdog have submitted their opinions on the matters, as required under Brazilian bankruptcy law.

Judge Chevrand further stated that there was no doubt regarding Oi’s illiquidity, a condition she had already recognized months earlier when ordering its liquidation. In light of the imminent liquidity shortfall, she ordered that all amounts Oi received under contracts related to essential public services be used to pay suppliers involved in providing those services. The measure was intended to help ensure service continuity while a decision on the replacement of Oi under those contracts remains pending.

Oi commenced its second[3] judicial recovery process in early 2023, seeking court protection to restructure BRL 43.7bn (USD 8.4bn) of debt. Although creditors approved a restructuring plan on 19 April 2024 and the court ratified it on 28 May 2024, Oi has faced increasing difficulties in complying with the plan since late 2024, and has been struggling to honor the payment of certain other post-petition and extraconcursal obligations.

On 10 November 2025, Judge Chevrand declared Oi insolvent and converted its judicial recovery proceedings into liquidation. The judge also suspended all enforcement actions against the company to ensure the orderly transfer of essential public services to alternative providers. Itaú Unibanco and Bradesco subsequently appealed the ruling and secured an injunction temporarily staying the liquidation order.

On 1 July 2026, Judge Monica Maria Costa Di Piero, of the First Private Law Chamber of the Rio de Janeiro Court of Justice, voted to deny the appeals and uphold the liquidation ruling. However, Judge Augusto Alves Moreira Júnior requested a review of the case, suspending a final decision on the appeals. The appellate proceedings are expected to resume in the coming weeks.

Relying on Oi’s financial situation described above, along with the findings supporting the lower instance liquidation order, we believe that the Rio de Janeiro appellate court will confirm the rejection of the appeals and the liquidation of the company.

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.

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Endnotes:

[1]  Under Brazilian bankruptcy law, the sale of assets via UPIs is free and clear of liabilities for the purchasers.

[2] SC Lowy and bond trustee UMB Bank appealed a decision approving the sale of UPI V.tal, because the price offered by Banco BTG Pactual was below the minimum price set in the sale notice. On 26 June, a Rio de Janeiro appellate court granted an injunction suspending the sale approval while the appeals remain pending a definitive ruling.

[3] The telecom services provider commenced a judicial recovery process in June 2016, and then again in March 2023.