Banks including Morgan Stanley, Itau BBA and Bradesco BBI rushed to place their forecasts for Rio de Janeiro-based Americanas under review after the news, announced by the company Wednesday evening in a regulatory filing. Among the issues found were debts with banks from supplier financing operations that aren’t adequately reflected in financial statements as of Sept. 30.

“We have limited visibility on the extent of the accounting inconsistencies,” Morgan Stanley analysts led by Andrew Ruben wrote in a note, moving their rating for the stock to not-rated from overweight.

Bonds tumbled 38 cents on the dollar in trading on Thursday, according to Trace pricing data. The crisis spread to other Brazilian retailers, with shares of Via SA declining as much as 16% before paring losses. Magazine Luiza SA fell 11% intraday but ended the session 5.3% higher in Sao Paulo. 

The filing, which estimated inconsistencies of 20 billion reais ($3.9 billion), shocked investors who had begun to snap up Americanas shares as a sign of faith in Sergio Rial’s ability to turn the company around. Rial, who ran Banco Santander SA’s Brazilian unit between 2016 to 2021, held a call with investors Thursday morning, saying the firm has more debt than assumed by the market and that it will need capital.

“It’s gut wrenching,” Rial said. “But it’s an opportunity to start having difficult conversations.”

Lemann and his longtime business partners from 3G, Marcel Telles and Carlos Alberto Sicupira, first poured money into the Brazilian retailer in 1982. They currently own a stake of about 31% and told the board they plan to keep supporting the company, according to the filing.

Rial said that he’ll work with the trio of longtime backers to help right the ship and said he has a “moral obligation” to lend his support while apologizing to investors.

Lemann, Telles and Sicupira have “built companies that were globally relevant, enabling Brazilian firms to have the capacity to compete with any other players across the globe,” Rial said in the investor call that was held at the Banco BTG Pactual headquarters in Sao Paulo. 

Sicupira and Lemann’s son Paulo Alberto both sit on the Americanas board. Lemann is the world’s 72th richest person, with a net worth of $21.3 billion, according to the Bloomberg Billionaires Index. 

Along with Rial, Chief Financial Officer Andre Covre also decided to exit, the company said. Rial will be temporarily replaced by Joao Guerra, who’ll also take over Covre’s investor relations director role. Americanas’s board of directors created an independent committee to investigate the situation. 

Americanas, whose market value shrank to 2.5 billion reais, said in the filing it expects the cash impact of these inconsistencies to be immaterial, though it added that it can’t yet determine the impact of the findings on its balance sheet. 

Americanas has more than 1,700 stores throughout Brazil that sell everything from televisions to fridges and also has an e-commerce arm. It owns a financial services arm, kids apparel stores and recently acquired a chain of fresh fruit, vegetables and food markets. 

In 2021, Lojas Americanas merged with its e-commerce unit B2W to become just Americanas. As part of the deal, the 3G partners gave up control of the firm but remained its largest shareholders. It listed more than 40,000 employees and about 53 million active users in its latest earnings report.