Brazil’s JBS, the world’s largest meatpacker, said it is to consider suing Oppenheimer Funds for defamation over attempts by the US-based investment group to hold it responsible for the debt of a poultry group.

Oppenheimer has filed a suit against JBS for leasing and operating the assets of Doux Frangosul, which the fund argues amounts to a de facto acquisition of the French-owned chicken company and assumption of liability for its debts. That includes $60m owed to Oppenheimer.

“JBS ... announced today it is considering legal action against Oppenheimer Funds for the recent repeated dissemination of false information in the press regarding the company’s rental of assets of Doux Frangosul,” JBS said.

“The company clarifies that any attempt to associate the rental of these assets with an acquisition is both false and misleading.”

The Frangosul case would test Brazil’s bankruptcy law just when investors gear up for what is expected to be one of Latin America’s biggest private debt restructurings in recent times – that of the oil company of billionaire Eike Batista.

JBS this year also acquired the chicken and pork unit of rival Marfrig, which together with the Frangosul assets, have made it the largest producer of chicken as well as beef in the world.

Frangosul defaulted on debts that creditors estimate at about R$1bn in late 2011. Its French parent, Doux, says it has started debt restructuring talks and made some payments. Oppenheimer says no talks are under way and it has received nothing.

Art Steinmetz, Oppenheimer’s president and chief investment officer said in an FT interview the case would harm Brazil’s reputation among foreign creditors. The fund’s debt is secured against one of Frangosul’s plants, Passo Fundo, in southern Brazil by an instrument known as fiduciary alienation, or a lien on the asset.

That is seen as one of the strongest forms of collateral in Brazil. Mr Steinmetz argues Frangosul’s decision to allow JBS to lease its assets without permission of Oppenheimer is a direct violation of the collateral agreement and illegal.

He said the actions of JBS are disappointing given the strong government presence in the company, with state-owned entities holding about 30 per cent of the meatpacker’s shares.

JBS counters its lease has kept the plants operating and saved thousands of jobs during restructuring without prejudicing Oppenheimer’s legal claims.

“The rental of the Doux Frangosul plants by JBS does not preclude or jeopardise any course of legal action by Oppenheimer to protect its rights,” JBS said.

“[But] any attempt on the part of Oppenheimer to hold JBS responsible for debts assumed by Doux Frangosul is evidence of a profound lack of knowledge of the basic principles of the legal system.”

JBS said the government has no managerial role.

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