Brazil's Ambipar files for bankruptcy amid growing credit market unease

Oct 21 (Reuters) - Ambipar AMBP3.SA and its U.S.-listed subsidiary have filed for bankruptcy protection after a turbulent period for the Brazilian waste management firm, adding to mounting concerns over corporate credit.

The subsidiary, Ambipar Emergency Response AMBI.A, filed for Chapter 11 protection in Texas, according to a court filing late on Monday, and listed estimated assets between $1 billion and $10 billion, with liabilities between $100 million and $500 million.

The bankruptcy move follows a cash crunch and the risk of accelerated debt repayments worth billions of reais.

According to Monday's filing, the Bank of New York Mellon BK.N, acting as trustee for bondholders, has listed unsecured claims of about $328 million tied to Ambipar's 2031 and 2033 green bonds.

In a filing with the U.S. Securities and Exchange Commission, the unit said that its parent has filed a request for judicial recovery with the Third Business Court of the Capital of Rio de Janeiro.

The company did not respond to a Reuters request for comment outside regular business hours.

Ambipar's stock plunged in September after the company secured a preliminary injunction from a Rio de Janeiro state court to temporarily prevent the accelerated maturity of its debt.

The court ruling, seen by Reuters, came amid a dispute with Deutsche Bank DBKGn.DE, which had demanded additional guarantees for loans to the company.

Ambipar, whose stock has lost nearly 96% of its value so far this year, was removed from all indexes of Brazil's main stock exchange operator, B3, earlier this month, due to governance issues.

Last month, the company also hired investment bank BR Partners BRBI11.SA as an adviser amid growing concerns about its leverage ratio.

CREDIT WORRIES

Ambipar said the bankruptcy was the result of a "sequence of events that followed the discovery of evidence of irregularities in the contracting of swap transactions by the Finance Department and the abrupt resignation of the former CFO," according to a Bloomberg report.

The report also said that the events "shook market confidence in the Ambipar Group and prompted some creditors to request changes in debt maturity, putting at risk the group's ability to handle its obligations".

The news outlet was the first to report on the bankruptcy.

A series of corporate debt troubles has rattled the market in recent weeks, led by the bankruptcies of auto parts retailer First Brands and subprime lender Tricolor.

While several analysts have described the cases as idiosyncratic and stemming from lapses in risk controls, investor sentiment has been fragile.

Tensions in corporate credit markets can ripple rapidly through global debt markets, amplifying risk aversion and tightening funding conditions.

JPMorgan Chase JPM.N CEO Jamie Dimon said earlier this month that there are likely more "cockroaches" in the credit market in reference to the auto bankruptcies and cautioned that more troubles may emerge ahead.

Further high-profile credit blowups could undermine investor confidence globally if they involve large financial institutions or suggest that cracks in the credit market run deeper than expected.