Court tells Textor’s Botafogo to deal with its debt or face its assets being frozen

March 12 – Brazilian club Botafogo has been told to renegotiate with creditors after failing to settle around Reais 10 million (€1.8 million) in debt. Failure to do so will result in the club’s assets being frozen.

Once again the Rio club looks to be plunging into financial turmoil. A regional labour court suspended their decision to freeze the club’s assets by five days to allow Botafogo to renegotiate new terms. The club have failed to pay creditors over the last four months.

The creditors had previously requested at court that Botafogo be considered a single debtor, which the court accepted. “It was an ex-officio decision. They are late with payments, 4 months late. We still don’t know the value. We asked, but they still haven’t said it,” said lawyer Leonardo Laporta, one of the representatives of the creditors’ group.

The situation has led to growing frustration for Botafogo owner John Textor. Last year the American took ownership control of the club, prompting a new legal structure for the club with the football department integrated into a limited company, Eagle Holding, whereas the other sports under the Botafogo banner were re-organised into a non-profit organisation.

The SAF structure comes with more financial accountability but still allows for debt settlement with the loophole that creditors might not agree on the percentage of debt that they will be paid over time. The new structure was seen as pulling the club from the brink of bankruptcy, burdened by almost €160 million of debt, but the latest episode suggests little has changed.

Textor acquired Botafogo as part of his growing portfolio of clubs. He also has stakes in Crystal Palace, RWD Molenbeek and most recently in Olympique Lyon. At the end of January, Botafogo sold Jeffinho for €10 million to Lyon, the biggest transfer in their history, suggesting that Textor considers Botafogo a feeder club and a way to recoup his investment in the Rio outfit.

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