Samarco’s creditors reject proposal for judicial reorganization

Creditors of Samarco mining company, a joint venture between Brazil’s Vale and Anglo-Australian BHP Group, today objected to the company’s proposal for judicial reorganization, according to a court document seen by Reuters.

In the document, the creditors said the main objective of the proposed plan is to protect the mining giants that own Samarco and reduce future payments to bondholders and creditors.

In doing so, they rejected Samarco’s offer of an 85% discount on the amount to be paid to the company’s largest creditors, including shareholders Vale and BHP, who have R$24 billion to receive from the joint venture. Payments will be made in 2041.

The creditors said that both Vale and BHP, as shareholders, should not be paid until after all other creditors have fully recovered their money. They also question a portion of the credits that members should receive

The creditors also rejected another alternative offered by Samarco, which would allow creditors to receive preferred stock in the miner as payment.

“It is unacceptable that a judicial reorganization plan for a company controlled by the largest mining company in the world should provide a real (and illegal) debtor amnesty to create value for its multi-billion dollar shareholders who are, in fact, jointly responsible for the largest environmental disaster in the world. Brazil,” the creditors said in the court document.

The failure of the Samarco Dam in 2015 killed 19 people and left hundreds homeless, as well as completely contaminating the Doce River in the Espírito Santo Sea, in what was at the time considered the largest socio-environmental disaster in the country’s history and led the company into serious financial problems.

The creditors, attorneys Paulo Badis and Marcos Pitanga, said in an interview that the creditors are arguing that Samarco, Vale and BHP pay in three equal parts for all damages caused by the dam collapse. However, Samarco has committed to all payments to repair the damage.