Rio, 6/20/2006 (Agência Brasil - ABr) - Luiz Roberto Ayoub, the judge who presides over the business court where the Varig case was decided warns that if the mandatory deposit of US$75 million (R$172.5 million) is not made by NV Participações (a group representing Varig employees) the June 8 auction will be considered void. "If the mandatory deposit is made, the problem is taken care of. I believe that is what will happen. I certainly hope so," declared the judge.

Ayoub explained that he examined the NV Participações bid carefully (the group offered R$1.01 billion, part (R$500 million) of which was in debentures). The judge said he was satisfied that the offer was sound, but he added that if the mandatory deposit was not made the bidder in default will not be eligible to participate in any further auctions.

The new owners of Varig will also have to inform the judge of the Bankruptcy Court of New York, Robert Drain, of the Brazilian court decision. Drain has issued an injunction protecting Varig aircraft from arrest until tomorrow (June 21).

Translation: Allen Bennett