Why are more Brazilian companies choosing out-of-court debt restructuring instead of formal bankruptcy proceedings?

Brazilian companies are increasingly opting for out-of-court debt restructuring due to the burden of high interest rates—especially the 14.25% Selic rate—on debt accumulated during the pandemic when rates were as low as 2%, combined with a 2020 legal reform that made the process more flexible, less costly, and reputationally safer than in-court restructuring, which involves all creditors, limits financing access, damages reputation, and disrupts operations.

What key legal and practical advantages does Brazil’s out-of-court restructuring mechanism offer compared to court-supervised processes?

The 2020 legal reform strengthened Brazil’s out-of-court restructuring mechanism by allowing companies to exclude certain creditor classes from negotiations and encouraging earlier talks before formal proceedings become necessary; unlike in-court restructuring, it permits direct negotiation with selected creditor groups, becomes binding on all creditors in affected classes upon simple majority approval, avoids reputational harm, preserves operational continuity, and prevents holdouts from blocking agreements.

Growing Number of Brazilian Companies Seek Out-of-Court Debt Fixes Amid High Rates

Jul 6, 2026

Brazilian companies across mining, agribusiness, and pharma sectors are increasingly pursuing out-of-court debt restructuring due to high interest rates, led by sugar-ethanol giant Raizen's $12.5 billion deal.

reuters

2026-04-19

Raízen Bank Creditors Said to Make Restructuring Proposal

2026-04-26

Raizen Proposes Alternative Terms to Creditors for Debt Restructuring

2026-06-03

Raizen debt holders to meet on restructuring plan

2026-06-06

Brazil's Raizen Secures Creditor Support for $12.5 Billion Debt Deal

2026-06-29

Raizen Burns More Cash, Sets Steeper Charge Amid Restructuring