Braskem S.A. — financial distress indicators
Financial-health summary
Braskem S.A.'s reported numbers place it in the 'Very weak' financial-health band (distress score 100/100). The main indicators are liabilities exceed assets (negative equity), operating profit does not cover interest and cash runway under 12 months. Independently, the Ohlson accounting model puts its 1-year failure probability at 81% and the market-implied (Merton) default probability is 90.1%.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Total liabilities are 1.21× total assets.
Balance-sheet insolvency test: debts exceeding the fair value of assets is the statutory definition of 'insolvent' in 11 U.S.C. §101(32).
Interest coverage (EBIT / interest) is -0.31×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
At the current free-cash-flow burn, cash covers ~8 months.
Going-concern standard: management must assess ability to continue for 12 months (ASC 205-40). Runway below that horizon forces dilution, asset sales or default.
Merton distance-to-default -1.29 σ → PD 90%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Total debt is 8.4× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
Operating cash flow negative in 2 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
O-score 1.42 → model probability 81%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Current ratio is 0.71.
Short-term obligations exceed short-term resources — the company relies on rolling over credit.
Short-term debt is 4.0× cash on hand.
Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.
Price is -64% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
0 severe and 2 moderate distress-related headlines in the last 6 months.
Headlines are corroborating evidence only; they are weighted lightly and never drive a flag alone.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- No material mitigating factors found in the available data.
📰 Recent news scan
- restructurPetrobras' Braskem Exposure Faces Test as Debt Talks ContinueYahoo Finance · 2026-09-28
- restructurBraskem Idesa, S.A.P.I takes strategic action through consensual restructuring to reduce its debt by more than US$920 MMYahoo Finance · 2026-08-18
- Update: Market Chatter: Petrobras Executive Expects Braskem to Finalize Deal With CreditorsYahoo Finance · 2026-09-25
- Update: Market Chatter: Braskem Creditors Seek $3 Billion Capital Injection From Controlling HoldersYahoo Finance · 2026-09-24
- Market Chatter: Petrobras Mulling Loosening Braskem's Contract Terms, Boosting Naptha Supplies Amid Debt NegotiationsYahoo Finance · 2026-08-18
- Market Chatter: Petrobras Considers Easing Terms for Braskem Ahead of DeadlineYahoo Finance · 2026-08-18
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Braskem S.A.'s financial-health indicators show?
As of 2026-10-08, Braskem S.A.'s public financial data places it in the 'Very weak' band with a distress score of 100/100, driven by liabilities exceed assets (negative equity), operating profit does not cover interest and cash runway under 12 months. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Braskem S.A.'s financial distress score?
100/100 ('Very weak'). Ohlson O-score 1.42 (model 1-year failure probability 81%). Merton distance-to-default -1.29 σ (model default probability 90.1%).
What works in Braskem S.A.'s favour?
No material mitigating factors were found in the available data.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Metals, Mining & Chemicals companies with distress indicators
- Largo Inc. (LGO)Very weak 100/100
- Odyssey Marine Exploration, Inc. (OMEX)Very weak 100/100
- BGL (BGL)Very weak 98/100
- Electra Battery Materials Corporation (ELBM)Very weak 88/100
- Bioceres Crop Solutions Corp. (BIOX)Very weak 87/100
- Sigma Lithium Corporation (SGML)Very weak 83/100
All Metals, Mining & Chemicals companies with distress indicators →
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.