Assaí sues French Casino, seeks freeze of Brazilian retailer GPA shares

The case was filed on Wednesday (24) at São Paulo’s Business and Arbitration-Related Disputes Court.

Currently, only part of the tax liabilities is being pursued by the Treasury—about R$36 million. However, the risk of further claims prompted Assaí to request a remedy to block 22.5% of Casino’s stake in GPA, valued at roughly R$475 million.

According to people familiar with the matter, Assaí fears Casino could sell the remaining 110 million common shares it still holds in GPA and transfer the proceeds to France. Casino already has a plan to monetize the stake and is seeking buyers. If new tax claims arise, with the capital moved abroad, Assaí argues it would be left exposed.

In its financial statements, Casino already classifies its Brazilian operations as discontinued.

An arbitration proceeding is expected to be opened within 30 days at the Brazil-Canada Chamber of Commerce Arbitration and Mediation Center. But such cases take an average of three years, which led Assaí to file an application for injunctive relief.

Assaí was a GPA subsidiary until 2020, when Casino took over GPA’s control. Currently, the French retailer is GPA’s second-largest shareholder, behind the Coelho Diniz family.

Last week, Brazil’s Attorney General’s Office of the National Treasury (PGFN) notified Assaí of the opening of an Administrative Liability Recognition Proceeding (PARR). The Treasury considers Assaí jointly liable for debts incurred while it was part of the same economic group as GPA (2007–2020). GPA disputes this, as it publicly stated in October 2024.

Under Brazil’s National Tax Code, however, companies can be held jointly responsible for contingencies related to acts and events that occurred before a corporate spin-off. These could involve disputes over social taxes PIS and Cofins or Tax on Financial Transactions (IOF).

Assaí could also face liability for other GPA-related obligations. According to a person with access to transaction documents, GPA has around R$17 billion in total contingencies and 5,000 municipal, state, and federal tax assessments. Assaí could be exposed to a portion of these related to the pre-2020 period.

In GPA’s second-quarter balance sheet, legal proceedings with guarantees and surety bonds totaled R$13.5 billion.

In its filing, Assaí argues that GPA’s owners acted abusively by selling assets in Brazil and distributing dividends to shareholders in Europe despite billions in contingencies.

Part of those dividends helped Casino pay foreign creditors during its debt restructuring proceedings in France after 2018.

A former Pão de Açúcar executive recalled that independent members had seats on the board of directors before the spin-off, as did Casino, which led the board at the time when these contingencies were growing. He added that there was widespread concern within the company that the amounts could escalate.

“However, there wasn’t much to be done since Casino, through Arnaud Strasser and others such as Ronaldo Iabrudi, had the decision-making power,” the person said.

In September last year, the Federal Revenue listed R$1.3 billion in Assaí’s assets as collateral for potential GPA debts. In October, however, GPA successfully appealed, and the measure was lifted.

At the time, GPA acknowledged responsibility for Assaí’s legal cases, which totaled R$36 million—R$4 million tax-related, R$15 million labor, and R$17 million civil.

The issue resurfaced because, according to people close to the matter, the Treasury is exploring alternative ways to hold Assaí accountable.

The chain argues it could only act now, after being formally notified of the PARR. The company is represented by the law firm Mattos Filho.

The Federal Revenue monitors whether companies maintain at least 30% of their assets to cover contingencies. Alerts are triggered when asset levels fall below that threshold.

Assaí’s advisers believe GPA’s asset sales, including the Colombian Éxito chain, reduced this ratio and drew the Treasury’s attention. That led the PGFN to look to Assaí, once part of GPA, as a potential source of recovery.

Following the PGFN notification, Assaí has 15 days to submit its administrative defense. The process may require deposits in court or guarantees.

Market participants expect GPA shares to respond to the development in Thursday’s (25) session, as Casino considers selling the stake to meet financial covenants with foreign creditors, a move Valor reported earlier. A decline in share value could affect those plans. Casino declined to comment.

This marks the first time Assaí has taken legal action against Casino. The cash-and-carry chain still carries debts left behind by the French group.

When Assaí was separated from GPA five years ago, it inherited about R$8.5 billion in debts from Colombian unit Éxito, a decision imposed by Casino. At the time, Assaí was GPA’s main cash generator.

Roughly 90% of Assaí’s current liabilities stem from that legacy debt burden, compounded by high interest rates. The company became fully independent in 2021 after its spin-off from GPA and is now a publicly traded corporation with no controlling shareholder.