Odebrecht has not recovered from Lava Jato and would go bankrupt in the next few hours

The holding company Odebrecht, the core of the conglomerate that extends from construction to oil and gas, filed an application for bankruptcy protection in a São Paulo court.

The company has sought court protection while it seeks to restructure $ 51 billion reais (13.1 billion US dollars) of debt, according to a statement. The Braskem SA, Odebrecht Engenharia and Construção SA, Ocyan SA, O NV, Odebrecht Transport SA and Enseada Indústria Naval SA units are not part of the restructuring, the statement said.

The private holding company was hit by tensions in early June when the group's ethanol unit, Atvos SA, filed for bankruptcy protection and discussions with LyondellBasell Industries NV about the unit's Petrochemical Braskem SA that has collapsed.

The conglomerate is struggling to recover from the consequences of the Lava Jato corruption investigation in Brazil. The survey, which began in 2014, put an end to the construction industry, with access to government projects having been cut off and jailed leaders. Odebrecht has paid fines amounting to millions of euros in other Latin American countries and its portfolio of new projects has declined, further aggravating the cash crisis.

Protect the debt

Earlier in the day, sources close to the company had announced the intention of the construction company to declare bankruptcy in order toRoteger 80 billion reals ($ 20.5 billion) of debts, guarantees and loans between the companies of a group of creditors, including Brazilian banks and foreign bondholders, said the people. This would be the biggest business failure in Brazil and Latin America, compared to the US $ 19 billion debt of telecommunications company Oi SA in 2016.

Odebrecht bonds have traded for a long time at difficult levels and perpetual notes are now trading at around US $ 0.6 per dollar.

The Brazilian lender Caixa Economica Federal executed the occupancy guarantees of the Arena Corinthians football stadium, which resulted in a failure to pay. The measure was taken when the ethanol unit of Odebrecht, Atvos SA, sought the judicial protection of creditors.

The holding company guarantees nearly 11 billion reais that Atvos borrowed from local banks. In total, the conglomerate owes about 6 billion reais to Caixa, as well as a fund administered by the bank, and this debt has no guarantee, said three people.

On June 4, negotiations were completed on the sale of Odebrecht's controlling stake in Braskem, considered a relic of the conglomerate. The agreement would have given the group a much needed injection of funds.