Oi’s Bankruptcy Raises Questions Over Service Continuity and Worker Payments

Brazil’s largest telecom operator, Oi, has entered bankruptcy, raising concerns about the fate of its essential services and the compensation of its workforce. The bankruptcy decree, issued by the 1st Chamber of Private Law of the São Paulo Court of Justice, came after creditors Itaú and Bradesco saw their appeals denied. A judicial administrator has taken over management of the company’s operations.

Oi, once a dominant player in Brazil’s telecommunications sector, provides landline, mobile, broadband and pay-TV services to millions of consumers and businesses across the country. Its network also underpins services that are considered essential, such as emergency telephone numbers and public payphones in remote localities.

Legal background

According to Mariana Zonenschein, a lawyer specializing in credit recovery at Zonenschein Advocacia, the bankruptcy does not mean an immediate shutdown of operations. “The law authorizes the provisional continuation of activities, and that is what should occur here,” she said. She emphasized that, as a public‑essential service, continuity is a regulatory requirement, noting that courts have previously ordered the restoration of Oi‑contracted essential services under penalty of fines.

Claudio Damasceno, a restructuring specialist and partner at RGF/BIZDOC, echoed that the service does not stop. “Customers keep their line, plan and billing, with operations running under judicial administration while the company’s future is sorted out,” he explained. He pointed out that certain enjoy reinforced protection, including the emergency numbers 190, 192 and 193, the roughly 7,500 public payphones in isolated localities, and contracts with public entities such as the Armed Forces, the Judiciary, Caixa Econômica Federal and the SAMU emergency medical service.

Service continuity protection

Damasceno added that the bankruptcy merely accelerates the transfer of remaining assets to whoever assumes control, but the transition is not instantaneous. “The substitution is managed by Anatel and the Justice system, so users are not left without coverage in the interim,” he said. He also noted that reversible assets — the infrastructure tied to the concession, including buildings — cannot be liquidated to pay creditors because ownership reverts to the Union, precisely to guarantee that users remain served.

Worker payouts and creditor order

Regarding worker compensation, Damasceno said employees are entitled to up to 150 minimum wages as part of the bankruptcy process. Brazil’s national minimum wage in 2026 is R$ 1,412 per month, which puts the ceiling at roughly R$ 212,000 (about US $40,000) per employee, though the actual amount will depend on the assets available after secured creditors and taxes are paid.

The payment sequence in a Brazilian bankruptcy first covers the costs of the bankruptcy proceeding itself. After that, creditors are paid in the following order: workers, holders of real‑guaranteed credit (such as banks with collateral), tax authorities, and finally unsecured creditors — a category that includes suppliers, bondholders and consumers with claims against the company.

Outlook and legal challenges

Legal challenges remain possible. Creditors may file embargos de declaração to seek clarification of the ruling, and, if unsuccessful, could appeal to the Superior Tribunal of Justice (STJ) to request suspension of the bankruptcy. Until such appeals are resolved, the judicial administrator will continue to oversee operations under the mandate to keep essential services running.