DEFINITIVE end of Casas Bahia? Large company faces bankruptcy

The company has been facing a serious crisis; understand the case

Recently, Casas Bahia (BHIA3) entered an extrajudicial recovery process. Announced on the night of April 28th, the news resulted in a 34.19% increase in the retailer’s shares. With this, the company recovered half of the losses recorded in 2024. In fact, this Wednesday (8), the company will release results for the first quarter of this year.

For those who are not familiar with the subject, extrajudicial recovery is a negotiation tool between the debtor company and creditors, without judicial intervention. In general terms, it assumes that the company’s economic and financial situation is fragile, but still compatible with a partial renegotiation.

In the case of Casas Bahia, it used the instrument because it understands that the renegotiation of its financial debt is enough to breathe new life into the retailer’s cash flow in the short term. Below, you can find more details about the case involving the company.

Is bankruptcy a reality for Casas Bahia?

According to Georgina Jorge, an analyst at Banco do Brasil (BB) Investimentos, the action filed by the retailer allowed the maintenance of payments owed to other classes of creditors not covered by the judicial recovery.

In other words, this eliminates the risk of judicial recovery, which would have negative implications for the company’s entire operation. Even so, approval occurs upon reaching 50% plus one of the quorum, which was already reached before the extrajudicial recovery was proposed.

Unlike large requests for judicial recovery, extrajudicial recovery, as it is a private agreement between debtors and creditors, does not usually attract much attention. It is worth noting that the appeal is provided for in Law No. 11,101/2005, Bankruptcy and Business Recovery Law, both of which are instruments for the recovery of companies.

Current scenario

For Georgina Jorge, the proposed re-profiling of R$4.1 billion reduces short-term pressure on Casas Bahia’s cash flow and, consequently, “allowing management to concentrate efforts on executing the operational levers of the Transformation Plan”. Furthermore, according to the expert, there is an increase in the average debt term from 22 to 72 months, with a reduction of 1.5 percentage points in the average cost.

Georgina Jorge highlights that BB Investimentos considers the extrajudicial recovery to be positive as it allows the debt to be re-profiled more quickly. “Ultimately, it eliminates the risk of imminent judicial recovery and allows the company to mature the initiatives related to its Transformation Plan“, he explained.

However, the broker maintains its recommendation to sell Casas Bahia shares, with a target price of R$9.80. The sentiment reflects uncertainty about macroeconomic conditions. Furthermore, there is still a risk that new fundraising by the retailer will not be successful.

“The other risks observed are inherent to the Transformation Plan itself, combined with a macroeconomic scenario that is still adverse to the consumption of durable goods“, highlighted Georgina Jorge.

Due to this uncertainty, the broker remains conservative with regard to the company relationship, highlighting that the company’s relief depends on profitability and cash generation, in addition to the other factors mentioned above.