The US Bankruptcy Court for the Southern District of Texas has authorized Mexico-based petrochemical producer Braskem Idesa's initial Chapter 11 requests, including access to debtor-in-possession financing intended to support the company's operations during its financial restructuring.
The case, filed on 17 August, is proceeding before Judge Christopher M. Lopez in the Houston division.
Braskem Idesa filed for Chapter 11 protection to implement a restructuring plan negotiated with key creditor groups and other stakeholders. Court filings state that the company intends to preserve business continuity while restructuring its balance sheet through the US bankruptcy process.
Braskem Idesa said in a declaration submitted in support of the filing that its financial difficulties resulted from a prolonged downturn in the global petrochemicals sector, compressed industry margins since 2022 and reduced ethane availability for its Etileno XXI petrochemical complex in Veracruz state, Mexico. The complex had to rely increasingly on imported ethane, raising operating costs and placing additional pressure on liquidity, it said.
Court records show that Braskem Idesa sought authority to obtain post-petition financing, use cash collateral and provide lenders with the protections typically associated with DIP facilities. The company argued that immediate access to additional liquidity was necessary to preserve asset value, maintain commercial relationships and support ongoing operations throughout the Chapter 11 process.
Braskem Idesa, a joint venture between Brazil's Braskem (75pc) and Mexico's Grupo Idesa (25pc), also disclosed in court filings that it received financial support from its shareholders before the Chapter 11 filing, including emergency financing facilities provided by entities affiliated with Braskem.
Separately, Braskem told investors that it expects to remain the controlling shareholder of Braskem Idesa following completion of the restructuring. The Brazilian petrochemicals producer said it supports the Mexican subsidiary's restructuring plan and the financing measures designed to strengthen liquidity and facilitate implementation of the reorganization.
The development comes as Braskem pursues a broader financial restructuring aimed at restoring a sustainable capital structure amid a prolonged global petrochemical downturn.
Braskem is separately negotiating with creditors to strengthen its capital structure. The company reported recurring Ebitda of R5.25bn ($1.04bn) and profit of R3.33bn in the second quarter, supported by stronger petrochemical prices and wider polyethylene spreads in Brazil and Mexico.
Sao Paulo-based Braskem operates production assets in Brazil, the US, Mexico and Europe, serving customers in more than 70 countries.
