Brazilian court freezes Varig’s assets

A court has ordered a freeze Wednesday on the assets of Varig airlines to ensure the payment of monies owed to employees of the nearly bankrupt carrier, while Brazil’s government took over the airline-sector pension fund. Judge Evandro Guimaraes in Rio de Janeiro imposed the embargo in response to a motion brought by several unions representing Varig’s roughly 11,000 employees, plaintiff’s attorney Jose Crescencio said.

Under the ruling, control of the carrier’s assets passes to consultants Alvarez & Marsal, the firm Varig hired two weeks ago to manage the airline’s efforts to get back on its feet.

Brazil’s flag carrier, which was founded 78 years ago, has debts of 7 billion reais (about $3.25 billion) and entered a court-supervised recovery process last June. The decision to freeze Varig’s assets will have to be approved by the court overseeing administration of the airline.

The company’s situation grew worse last week, when managers said they had run out of operating funds, though Varig’s aircraft continued to fly their routes.
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