The operator of Starbucks Brasil, which accumulates a debt of R$1.8 billion, has had its request for judicial recovery denied.
SouthRock Capital, the company responsible for the Starbucks brands,SubwayTGI Fridays and Eataly in Brazil, had its request for judicial recovery denied by the São Paulo Court and lost, in addition to losing the license to use Starbucks on national territory.
The request for judicial recovery was filed to extend the payment period for the debts of all brands, which total R$1.8 billion. According to the company, the justification for the process is due to the low level of confidence in Brazil, the country’s financial instability, interest rates and exchange rate variations between the real and the dollar. The documentation presented by the operator’s lawyers reports that the debts accumulated due to the losses caused by the pandemic. Only Starbucks Brazil faced a significant drop in sales, with a 95% reduction in 2020, 70% in 2021 and 30% in 2022.
In addition to accumulating a loss of more than R$721.6 million, Starbucks Brasil Comércio de Cafs LTDA owes R$21.8 million in royalties to Starbucks International, which resulted in the loss of the license to use the brand in its territory. Brazilian. The consequence of this was the closure of several units of the coffee chain across Brazilian territory, such as in São Paulo, Rio de Janeiro and Rio Grande do Sul.
In a decision, the judge 1st Bankruptcy Court of São Paulo, Leonardo Fernandes dos Santos, denied the request for judicial recovery and assessed that there is a need for an examination of the documentation sent by the debtor to understand the data provided, as well as verify whether these are true.
According to the judge, it is necessary to verify the situation of the company on the spot, in order to know its real operating conditions”.
In response, SouthRock Capital stated that it is appealing the initial and not yet definitive decision of the São Paulo Court, but that, even with the closure of several units, it will continue with operations in Brazilian territory.
While these structural adjustments are implemented, all brands will continue to operate and deliver the exclusive products and unique experiences that each offers to consumers who visit their stores every day, SouthRock Capital shared in a statement.
If the situation wasn’t already the best, now it’s even more complicated. Some shopping malls that hosted Starbucks Brazil units, such asShopping JK Iguatemi and Patio Higienpolis, in addition to two real estate funds, TOP Center and Gazit Malls, filed an eviction action against the coffee chain due to non-payment of rent.
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