A bankruptcy judge canceled the results of the auction of Brazil's Varig airlines on Friday, after the company's employees' group failed to pay the first required payment.

Judge Roberto Ayoub said the Varig Workers Group (TGV), which had made the sole bid for Varig airlines at a bankruptcy auction on June 8, failed to make the 75-million-U.S.-dollar first deposit required under the auction's rules.

The TGV's 450-million-dollar bid, accepted on June 12, was only about half the original price tag of 860 million dollars.

Ayoub added that the future of the company, now operating under bankruptcy protection and whose most flights have been grounded, will be decided next Tuesday and the bankruptcy court has three alternatives: to declare bankruptcy, to organize a new auction or to analyze the new buying proposition that was made after the auction.

The judge also noted that Volo Brasil, a company which bought Varig's cargo branch VarigLog earlier this year, had made an offer of 500 million dollars on Varig Wednesday.

Marcio Marsillac, who heads the TGV, said the group gave up buying the company because of a series of uncertainties surrounding the airlines.

The 79-year-old Varig is struggling with more than three billion dollars of debts, mostly to airports and fuel companies. U.S. leasing companies have also filed suits against the company, aiming to take 19 of its planes.

Varig has suspended indefinitely the majority of its flights and some 28,000 passengers with Varig tickets have been stranded overseas.

Source: Xinhua