Brazilian court declares Oi bankrupt, putting air traffic control and essential services like the lottery network at risk.
The operator Oi had its bankruptcy decreed by the Rio de Janeiro Court this Monday (10). The decision exposes vulnerabilities in essential services that depend on the connectivity provided by the company, including the Brazilian airspace control system. The judicial measure converted the recovery process into bankruptcy after the finding of the operator's irreversible insolvency. More than 13 lottery outlets in the country were also at risk of shutting down if the services provided by the operator were suspended immediately.
Oi currently maintains approximately 4.600 contracts with federal, state, and municipal public bodies, including ministries, universities, state-owned companies, and institutions that depend on its telecommunications services. The company is also responsible for services considered critical, such as emergency telephone lines—police, fire department, and civil defense—and the connectivity of 1.300 lottery outlets of Caixa Econômica Federal (a Brazilian bank).
Judge Simone Chevrand, of the 7th Business Court of Rio de Janeiro, devised a transition strategy that will allow the provisional continuation of Oi's activities while other providers take over its functions. According to information from Graciliano Rocha's column on UOL Notícias , the company's financial situation had deteriorated significantly, compromising its basic operational capacity.
Cindacta (Integrated Center for Air Defense and Air Traffic Control), responsible for coordinating commercial flights and air defense operations in Brazil, is one of the main users of the operator's services. Oi provides essential data and voice connections to the four regional centers located in Brasília, Curitiba, Recife, and Manaus.
The bankruptcy also affects other critical services dependent on the company's infrastructure. The operator maintained public telephones in 7.500 locations where it was the sole service provider, in addition to three-digit and interconnection systems that guarantee access to emergency services.
In the coming weeks, the transition of services will take place according to an agreement established between Oi, Decea (Department of Airspace Control), and the Claro operator, which will assume the functions previously performed by the bankrupt company. The process mobilized more than 100 civil and military authorities to "prevent the collapse of the system."
A report cited by the judge in the ruling warned about the risks of the situation: “Thus, an ordinary judicial liquidation, consisting of converting the judicial reorganization into bankruptcy, could lead to a national collapse in these services, causing excessive harm to the community, and, in some cases, considerable operational risks to civil and military air traffic, controlled by Cindacta.”
The judge had to adopt extraordinary measures even before the bankruptcy was declared to guarantee the continuity of essential services. In her decision, she stated: “This court even had to order the satellite signal service provider not to interrupt service, even in the face of repeated non-payment, seeking to maintain Cindacta's services intact and prevent an impending tragedy. It also had to order numerous restorations of electricity supply to various properties throughout the country, all resulting from non-payment.”
The strategy implemented by the courts seeks to protect air traffic control and all essential services that depended on Oi's infrastructure. The transition aims to ensure there is no interruption while other operators take over these functions. Another critical point is that approximately 13 lottery outlets across the country would be at risk of shutdown if the services provided by Oi were immediately suspended following the declaration of the operator's bankruptcy.
The connectivity of 13 lottery outlets across the country is also provided by Oi, and if there were a sudden disconnection, that service would also have to be interrupted. Chevrand pointed out that in many locations, lottery outlets are the only providers of banking services for the population.
The solution found by the judge means that Oi, even with the declaration of bankruptcy, must use its monthly revenue to continue operating essential services temporarily, while all its liabilities are frozen for later payment.
The judge made it clear that the goal was not to save the company, but to protect the Brazilian population from a collapse that would affect everything from air transport to the most basic banking services.
