PDG, one of the largest real estate developers in Brazil, files for bankruptcy protection.
One of Brazil's largest real estate developers, PDG Realty, has filed for bankruptcy protection in the São Paulo Court of Justice, with total debts of R$7,8 billion and nearly 23 creditors. PDG was once the largest publicly traded real estate developer in the country in 2010 and 2011. In crisis for years, it hasn't launched any new projects since the end of 2014; the situation has worsened drastically with an increase in contract cancellations and a negative net worth of R$838 million at the end of September.
247 - One of Brazil's largest real estate developers, PDG Realty, has filed for bankruptcy protection in the São Paulo Court of Justice, with total debts of R$ 7,8 billion and nearly 23 creditors. PDG was once the largest publicly traded real estate developer in the country in 2010 and 2011. In crisis for years, it has not launched any new projects since the end of 2014. The situation has worsened drastically with an increase in contract cancellations and a negative net worth of R$ 838 million at the end of September.
This information comes from a report by Valor.
"APDG doesn't mark the debut of the real estate sector in judicial reorganizations, but it is certainly the most emblematic – due to its size and the number of people involved. Beyond the specific rules, the sector carries a unique aspect: bringing the end consumer into the process. Of the total debts, R$ 1 billion is related to lawsuits with clients – from contract terminations to late payment penalties and disputes over repairs."
During the nearly four months of strategy preparation, the team involved in the case – PDG's management, RK Partners, and the specialized law firm E.Munhoz – dedicated time to discussions with the banks to structure an amicable model with less risk of litigation. In addition, it was necessary to gather and organize a large quantity of certificates and documents.
PDG's recovery process has brought 512 special purpose entities (SPEs) to court. Ten documents had to be submitted for each one. The complete paperwork exceeds 20 pages.
Of the total number of Special Purpose Entities (SPEs), 57 have segregated assets. After the controversies involving Viver, a newcomer to the sector undergoing judicial reorganization, PDG chose a different path. Each of these 57 has a dedicated chapter in the petition submitted to the judge, precisely to ensure that the debt restructuring process respects the segregated assets. With this, creditors linked to each 'affected' project will have a solution that respects their connection to these assets.
When contacted, the company did not comment on the matter. Before the opening of trading, it told the Securities and Exchange Commission (CVM) that the judicial reorganization process allows it to maintain its activities and preserve the company's cash flow, as well as being the way found to coordinate, with defined deadlines, all those involved in the process.
Yesterday, the developer's shares fell 10,83%, to R$ 2,88. The company's market value closed the day below R$ 142 million.