BRAZIL · RETAIL

Casas Bahia, Brazil’s best-known electronics and furniture chain, has filed for court protection from its creditors. The filing covers R$17.3 billion, about US$3.4 billion, owed to some 28,000 creditors.

A Casas Bahia store. The filing covers R$17.3 billion and about 28,000 creditors.

Judicial recovery filing

the retailer, Brazil’s largest appliance and furniture retailer, filed for judicial recovery on 17 August. The petition, published by legal news site JOTA, lists R$17.3 billion (US$3.1 billion) in debt owed to about 28,000 creditors.

The filing follows a reported loss of R$10.1 billion (US$1.8 billion). Judicial recovery is Brazil’s version of Chapter 11 bankruptcy, protecting a company from creditors while it negotiates a repayment plan.

Mass layoffs and court order

In mid-August, the chain dismissed about 3,000 workers, roughly 6.7% of its workforce, and closed 298 stores. The dismissals happened on 13 and 14 August, with about 1,900 workers let go in those two days.

On 18 and 19 August, the 11th Labour Court of Brasilia, part of the TRT-10 regional court, suspended the dismissals. Judge Katarina Roberta Mousinho de Matos ordered the company to temporarily restore contracts and benefits.

What Grupo Casas Bahia does. Grupo Casas Bahia S.A., together with its subsidiaries, operates as an omnichannel retailer in Brazil. The company provides consumer electronics, home appliances, furniture, and other domestic items. It also engages in the manufacture, industrialization, and sale of wood-based furniture; ownership and management of equity interests; management of logistics operations; and provision of…

Top labor court upholds suspension

On 5 September, the TST upheld the suspension. Minister Jose Roberto Freire Pimenta ruled.

The company’s appeal is pending at the TRT-10.

The original injunction gave the company five days to restore contracts and payroll, and 48 hours to reactivate health plans. It also set fines for non-compliance.

Fines and severance pay

The court fined R$500 per worker daily for not restoring contracts, capped at ten months’ salary. A R$10,000 fine per worker applies to new mass dismissals without union talks.

Workers were paid severance, and the injunction states that sums already paid need not be returned for now. The union case is about the lack of prior collective bargaining, not about withheld pay.

CEO warns of worse 2027

Chief executive Renato Franklin spoke publicly on 18 August about the cuts and the debt. He said, ‘We are not working on the assumption the macro picture improves.

We think 2027 will be worse than 2026.’

Franklin leads Grupo the group, listed as BHIA3, which also owns the Ponto brand. The company renamed itself from Via in 2023.

Auction of returned goods

On 20 August, the retailer held an online auction of 391 lots of returned and surplus appliances on the Kwara platform. Items included phones, laptops, televisions, refrigerators, and stoves, sold as-is.

This was a sale of reverse-logistics stock to preserve cash, not a liquidation of company assets. Buyers paid a 5% auctioneer commission plus 15% in fees.

São Paulo tax probe

On 3 September, São Paulo prosecutors launched a new phase of Operacao Icaro. They probe alleged bribes to tax auditors for early tax credit release.

The filing alleges R$2.98 million in bribes tied to the chain.

Prosecutors allege R$27.6 million was paid in 2023 to lawyer Joao Andre Buttini de Moraes. He is in preventive detention; the company is a beneficiary, not a defendant.

What workers say about severance

Unions have not publicly claimed that the group withheld severance pay. The legal fight centers on the company dismissing workers without prior collective bargaining.

Brazilian labor law requires companies to negotiate with unions before mass layoffs. The court suspended the dismissals because that step was skipped, not because pay was missing.

Who is Renato Franklin

Renato Franklin has been chief executive of Grupo the retailer since 2019. He previously led the company’s digital arm and helped steer its turnaround plan.

Franklin took over when the retailer, then called Via, was struggling with online competition. He renamed the company the chain in 2023 to focus on its core brand.

How judicial recovery works in Brazil

Judicial recovery is Brazil’s court-supervised process for insolvent companies, similar to Chapter 11 in the United States. It shields a firm from creditor lawsuits while it negotiates a repayment plan.

The company must present a plan to creditors within 60 days of filing. If approved, the firm gets up to two years to implement it, with court oversight.

What happens next in court

The Superior Labour Court upheld the suspension on 5 September. the company’s appeal is pending, so it must keep paying workers.

If the company fails to comply, it faces fines of R$500 (US$90) per worker per day. The union case could drag on for months as courts weigh collective bargaining rights.

The tax probe and company response

São Paulo prosecutors named the group as a beneficiary in a tax-credit scheme, but the company is not a defendant. It says it has not been formally notified of any investigation.

the retailer set up an independent committee to look into the allegations internally. The committee is chaired by board member Jackson Schneider, who also sits on the audit committee.

What the layoffs mean for workers

The court suspension means dismissed workers must be temporarily rehired. Their contracts, health plans, and other benefits are restored while the case proceeds.

The legal fight is about procedure, not pay. Brazilian law requires companies to negotiate with unions before mass layoffs, and the chain skipped that step.

How the company got here

the company has been shrinking for years. It has cut almost 12,000 jobs since 2023, according to Folha de S.Paulo.

The retailer, once Brazil’s biggest appliance chain, has struggled with online rivals and heavy debt. Its transformation plan includes closing stores and cutting costs.

Who is investigating the tax credits

São Paulo state prosecutors are running the probe, called Operação Ícaro. They suspect companies paid bribes to tax auditors for early release of tax credits.

The alleged kickbacks ran from 1 to 2.5 percent of the credit amount. They were paid through lawyers, according to Valor Economico.

What the company says about the probe

the retailer says it has not been formally notified of any investigation. It ‘repudiates illicit acts’ and will cooperate with authorities.

The board set up an independent committee to look into the allegations internally. Jackson Schneider, an independent board member, chairs it.

What happens next in the recovery

The company must present a repayment plan to creditors within 60 days of filing. Courts will then vote on it.

If approved, the chain gets up to two years to implement the plan. The labor case and the tax probe could affect that timeline.

Company response to tax allegations

On 6 September, Casas Bahia said it ‘repudiates illicit acts’ and maintains its disposition to cooperate with authorities. It is due to file a formal clarification with the B3 stock exchange on 8 September.

The company has not been charged, and being named in documents is not the same as being accused. It has set up an independent committee to investigate internally.

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