The financial woes of Brazil's embattled OAS Group have sparked an international bankruptcy duel and sent bondholders to a New York court for aid, Dow Jones Business News reported yesterday. Investors owed $943 million fear that they will not get fair treatment from the Brazilian court overseeing the construction company's debt restructuring. On Tuesday, they asked a bankruptcy judge in New York to acknowledge an insolvency proceeding they launched in the British Virgin Islands as the proper forum to work out the fate of OAS's international bond debt. The construction giant filed for bankruptcy protection in Brazil after being accused by prosecutors of charging inflated fees on contracts involving that country's national oil company, Petróleo Brasileiro SA, or Petrobras. OAS says it will sell assets to pay down its debts and preserve its construction business. OAS is moving ahead with a turnaround effort in Brazil, over the objections of some investors and reported its victory in a Brazilian court fight with the "'vulture' Aurelius, a North American fund renowned for speculating with bonds traded in the secondary market." Aurelius Capital Management, which owns OAS bonds, unsuccessfully challenged a ruling that wrapped the financing unit into the Brazilian insolvency proceeding. Bondholders say OAS Finance is a British Virgin Islands company, owed more than $1 billion by Brazilian units of OAS. Its interests are likely to be overlooked as OAS tries to hold its business together, the bondholders contend. They have petitioned a court in the British Virgin Islands to oversee OAS Finance's affairs.
