Avibras rocket and missile launcher company seeks bankruptcy protection

Avibras Aeroespacial, the main Brazilian manufacturer of heavy systems for the Defense market, filed for judicial recovery yesterday. As a result, the company laid off 420 employees. The remaining staff is now 900 people.

The lawsuit was filed at the Jacareí (SP) forum, where the group’s headquarters are located. This is the third time the company has renegotiated its debts in court. The procedure was previously adopted in 1990 and in 2008. The recovery value is estimated at R$570 million.

Avibras produces the Astros-2020 rocket and missile launcher system, armored vehicles and electronic equipment for military use. In addition to serving the Brazilian Armed Forces, it exports to countries in the Middle East, Asia and Latin America.

According to the lawyer responsible for filing the company’s recovery request, Nelson Marcondes, from the Marcondes Machado Advogados office, the pandemic was largely responsible for the company’s current moment. According to Marcondes, the company tried to hold back as much as possible so as not to lay off part of its 1,500 employees, but this was not possible in 2022.

The company suffered from the change in priority of countries around the world during the health crisis. With the proliferation of the virus, several nations have reduced spending on the defense area and started to invest more in health.

In addition, according to Marcondes, the impossibility of making trips also complicated Avibras’ situation. After all, a good part of the company’s sales is made through fairs and contacts abroad. Training to use the equipment also needs to be in person.

The lawyer also claims that the company is already preparing a recovery plan and that it awaits the decision of the Court to proceed with the process. Contact with creditors is already being made, according to Marcondes.

“The company tried to hold back as much as possible, but we are already seeing the market moving again and Avibras has great prospects for contracts that are being worked on”, says Marcondes.

History

Avibras Aeroespacial is just over 60 years old. Created by engineer João Verdi de Carvalho Leite – killed in 2008 when the helicopter he was piloting crashed in a stretch of mountain range on the north coast of São Paulo –, the company leads the sector of the Defense industry in the country.

Strongly linked to the foreign market, the group had, for years, difficulties with the procedures of the government’s economic area. “We are treated by public agencies in the same way as fruit or chicken exporters”, said João Verdi.

On several occasions, with solid contracts in its portfolio, Avibras came close to losing hundreds of millions of dollars of international business because of federal bureaucracy.

The Astros-2 systems and its more modern version, the Astros-2020, are used by the Saudi Arabian army in the conflict with the Houthi rebels in Yemen. Prior to that, in the 1991 Gulf War, they were employed by Iraq and entered the US-led coalition’s list of priority fighter jets.