Brazilian retail giant Grupo Casas Bahia asked a court in Sao Paulo on Monday to order state-controlled Banco do Brasil to return 422 million reais (roughly $80 million) that the bank unilaterally debited from the company's accounts, according to a report by newspaper Folha de S.Paulo. The request was filed with the 2nd Bankruptcy and Judicial Recovery Court of Sao Paulo, as part of the retailer's ongoing bankruptcy protection proceedings, a process known in Brazil as "recuperação judicial" similar to U.S. Chapter 11.
According to the court filing, Banco do Brasil had acted as guarantor on contracts Casas Bahia held with suppliers Apple and insurer Mapfre Seguros. After Casas Bahia filed for bankruptcy protection, those suppliers reportedly called in the guarantees. The bank paid the suppliers and then debited the equivalent amount from Casas Bahia's accounts to reimburse itself last Friday, the retailer's lawyers say.
Casas Bahia disputes the move, arguing the bank used the transaction to settle a debt that should instead be subject to the rules of the bankruptcy protection process, rather than collected outside of it. The company's lawyers contend Banco do Brasil should have raised its claims in court instead of debiting the funds directly.
"Several of these creditors have already begun a real 'race' to individually satisfy their claims on terms different from the recovery plan," Casas Bahia said in the filing, according to Folha. The retailer argues this violates the principle of equal treatment among creditors, a cornerstone of Brazil's bankruptcy law.
Casas Bahia filed for bankruptcy protection on August 16, reporting total debts of 17.3 billion reais (about $3.3 billion). Monday's filing bundles several requests aimed at stopping further outflows of cash from the company's accounts while the recovery process moves forward. Banco do Brasil and Apple told Folha they would not comment on the case. Mapfre and Casas Bahia itself did not respond by the time the story was published.
Other fronts in the crisis
The banking dispute unfolded alongside another legal battle facing the retailer: also on Monday, a labor court upheld a ruling that had suspended the layoffs of 1,900 Casas Bahia employees and ordered their provisional reinstatement, according to news outlet g1. In a statement, Casas Bahia said it respects the judiciary and that the measures are part of a "broad restructuring process" needed to keep the business running.