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A New York bankruptcy judge delivered an unambiguous rebuke of Aurelius Capital Management LP’s litigation strategy in the complex and contentious international restructuring of Brazilian telecom giant Oi SA, WSJ Pro Bankruptcy reported. In a decision handed down on Monday, Judge Sean Lane of the U.S. Bankruptcy Court in New York declined to recognize a chapter 15 U.S. bankruptcy proceeding launched earlier this year by an Oi affiliate based in the Netherlands. The judge said that Aurelius “weaponized” the Dutch affiliate to attack Oi’s broader restructuring goals. “In sum, the strategy pursued by Aurelius in these cases is a troubling one that the court refuses to countenance,” Judge Lane wrote. “Aurelius’ actions also reflect a lack of candor before the court,” he added.

The judge overseeing the bankruptcy of Avaya Inc. said yesterday that he would confirm the telecommunication company’s chapter 11 plan, bringing its nearly year-long effort to reorganize its finances effectively to a close. Bankruptcy Judge Stuart Bernstein said at a hearing that he was satisfied with the plan, which marked a third try by the communications software and services provider for a blueprint for emerging from bankruptcy. The plan provides holders of first-lien debt with 90.5 percent of stock in the reorganized company and holders of second-lien notes with a pro rata share of 4 percent of stock and warrants for an additional 5.1 percent of the shares. General unsecured creditors such as vendors will receive $57.5 million in cash, and the government’s pension insurer, the Pension Benefit Guaranty Corp., will receive $340 million in cash and 5.5 percent of shares.

Brazilian telecommunications firm Oi SA's chief executive has resigned, a spokeswoman for Oi's largest shareholder said on Friday, two weeks before crucial talks in Latin America's biggest-ever bankruptcy proceedings, Reuters reported. A spokeswoman for Portugal's Pharol SGPS SA, which owns about 27.5 percent of Oi's voting shares and is part of a controlling shareholder bloc, said it had been informed of Marco Schroeder's resignation. Telecoms regulator Anatel had threatened to intervene in the carrier if it changed management. However, a government source, who spoke on condition of anonymity, said on Friday that Schroeder's departure did not make intervention more likely. Oi is two weeks away from a crucial creditor vote on a proposal to restructure 65 billion reais ($20 billion) of debt, with creditors and shareholders fighting over vastly different proposals for Brazil's biggest fixed-line phone company.

Brazilian telephone carrier Oi SA revealed its latest restructuring proposal yesterday, which included a provision requiring the company to pay bondholders significant annual fees in exchange for injecting capital into the debt-laden carrier, Reuters reported. Oi, in a securities filing, said its plan would involve a minimum capital increase of 7.1 billion reais ($2.16 billion), of which 3.5 billion would come from a cash injection and 3.6 billion from a debt-for-equity swap. Bondholders that inject capital into the company would receive an upfront fee of 6 percent on their contribution plus annual fees of 8 percent.

The two largest groups of Oi SA bondholders have agreed to inject more cash into a proposed restructuring of the Brazilian telecom’s debt, two people familiar with the matter said on Friday, in the latest twist in Latin America’s biggest-ever bankruptcy, Reuters reported yesterday. The international bondholders committee and the ad hoc group of Oi bondholders on Friday said that proposed changes, which it did not specify, could draw support from other creditors and provide enough new capital to make the restructuring plan “viable.” The additional funding could help the groups fend off a rival restructuring plan by influential shareholder Nelson Tanuré and a smaller group of bondholders known as the G6. The two main credit groups had previously committed to injecting 3 billion reais ($920 million) the restructuring in court of Oi’s 65 billion reais of debt. Both groups and export credit agencies are owed a combined 22.6 billion reais by Oi.

San Antonio, Texas-based radio-and-billboard giant iHeartMedia Inc. said yesterday that it has offered a counterproposal offering lenders and bondholders more control of the company that is almost bankrupt, the San Antonio Express-News reported today. But an agreement has not been reached, iHeartMedia said in a U.S. Securities and Exchange Commission filing. The new offer from iHeartMedia is close to a 50-50 split of control of debt-ridden iHeartMedia and the billboard unit, Clear Channel Outdoor Holdings Inc., which is 90 percent owned by iHeartMedia, said Seth Crystall, Debtwire senior credit analyst. iHeartMedia last March launched $14.6 billion debt-restructuring deal to bondholders and lenders that ended up being the starting point for prolonged negotiations between the company and its creditors. Total company debt, as of June 30, stood at almost $20.4 billion, stemming mainly from 2008 leverage-buyout from two Boston-based private-equity firms. Bain Capital and Thomas H. Lee Partners acquired 70 percent of the company then known as Clear Channel Communications. In 2018, $324.2 million of debt comes due and $8.4 billion in 2019, but some debt is owned by Bain and Thomas H. Lee. As of June 30, its cash on hand dropped to $260.5 million. The company warned last spring that it might not be able to meet scheduled debt repayments.

Brazilian phone carrier Oi SA faced two setbacks from the government yesterday in its efforts to pull off the country’s biggest-ever in-court debt restructuring, Reuters reported. Brazilian telecoms regulator Anatel yesterday rejected the company’s request to swap billions of reais in regulatory fines for new investments. Anatel said in a statement that the “unsatisfactory” progress of Oi’s reorganization, now in its 16th month, raised doubts about the company’s ability to honor investment commitments resulting from a fine-for-investment swap. Late yesterday, the president of Brazilian national development bank BNDES, Paulo Rabello de Castro, said Oi’s restructuring plan was insufficient. The company owes BNDES 3.3 billion reais ($1 billion).