Varig services to Varig. Year-long discussions to merge Varig with TAM Airlines ended unsuccessfully in 2004 and the same year Varig fell to third place in the Brazilian domestic market share, behind TAM and Gol. VARIG applied to the Commercial Bankruptcy and Reorganization Court in Rio de Janeiro on , for the commencement of "judicial reorganization" proceedings pursuant to the New Bankruptcy and Restructuring Law of Brazil (Law 11.101). The request was granted on 22 June 2005. VARIG continued to provide services despite its financial troubles. In order to raise funds, the Bankruptcy and Reorganization Court decided to sell two of
Varig a new competitor in the Brazilian market: Gol Airlines and increasing competition of VASP and Transbrasil fighting for survival by dumping fares. Furthermore, for the first time since 1961, Varig lost the first place in the domestic market share in terms of passengers/km for TAM Airlines. Later in the year, the September 11 attacks further increased operational and economic difficulties of Varig. In 2002, Ruben Berta Foundation merged the administration of Varig and its subsidiary Rio Sul Serviços Aéreos Regionais (which included the brand Nordeste Linhas Aéreas Regionais). The three brands were used separately with Rio-Sul and Nordeste providing feeder