Brazilian Companies Increasingly Opt for Out-of-Court Debt Restructuring
A growing number of Brazilian companies are choosing out-of-court debt restructuring to manage financial difficulties, a trend highlighted by Raízen's R$ 65.1 billion debt restructuring request in 2026. This approach has seen a significant rise, with out-of-court filings jumping from 16 in 2021 to 84 in 2025, and 33 more by early 2026. Companies across various sectors, including industry, mining, retail, agribusiness, and logistics, are utilizing this mechanism, as reported by the Brazilian Observatory of Out-of-Court Restructuring (Obre). The surge is attributed to persistently high interest rates, currently at 14.25%, which strain businesses, particularly those that borrowed heavily during the pandemic when rates were at a historic low of 2%. A 2020 legal reform has also made these out-of-court processes more flexible and effective, fostering a cultural shift towards proactive debt negotiation. This mechanism allows companies to negotiate with specific creditor groups, and once approved by a simple majority, the plan becomes binding for all affected creditors, avoiding the complexities and reputational damage associated with judicial recovery. Notable cases include retailers Casas Bahia and Tok&Stok, and GPA, demonstrating the mechanism's adoption across different economic scales and sectors. The total debt involved in these out-of-court restructurings has surpassed R$ 109 billion in 2026, up from R$ 41.5 billion in 2024. Experts anticipate this trend will continue, with companies like Oncoclínicas reportedly considering this path.
The increasing adoption of out-of-court debt restructuring in Brazil reflects a confluence of macroeconomic pressures and legislative improvements. Persistently high interest rates, coupled with the lingering effects of pandemic-era borrowing, create a challenging environment for corporate solvency. The 2020 legal reform appears to have successfully streamlined the out-of-court process, offering a more efficient and less stigmatizing alternative to judicial recovery. This shift suggests a maturing financial landscape where proactive negotiation is favored over protracted legal battles. Investors' heightened sensitivity to credit risk, influenced by global uncertainties, further incentivizes companies to seek swift resolutions. The trend indicates a systemic response to economic conditions, potentially signaling a need for ongoing evaluation of corporate debt structures and interest rate policies to foster long-term stability.
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