Brazilian laws on bankruptcy are similar to the US system of Chapter 11 and date back just seven years to 2006. But there is concern that loopholes allow 'de facto' companies to run parts of the business of other organisations without a legal connection being established between them. This could mean that some organisations could continue trading through their 'de facto' partners even when they are insolvent. 

Outstanding loan

In this case, the US company OppenheimerFunds Inc is suing JBS over a 2008 outstanding loan of US $ 208 million which was made by Oppenheimer to the Brazilian arm of a French company, Doux SA, Frangosul. Oppenheimer is being represented by Fernando Bilotti Ferreira of Santos Neto Advogados in Brazil. Mr Ferreira told The Wall Street Journal that various actions linking JBS and the French company showed that JBS was 'incorporating' the company.

Government ownership

The Brazilian government is also involved in the chain of events. Oppenheimer said in a statement: 'The fact that JBS is partially owned indirectly by the Brazilian government further exacerbates OppenheimerFunds' concern and frustration, as it is unclear to us whether the government has notice of and supports such questionable legal practices.'