Markets took notice earlier this year when sugar and ethanol producer Raizen pursued the largest out-of-court debt restructuring in Brazilian history, valued at $12.5 billion. But as it turns out, Raizen was far from the only company heading down that road.
After enduring years of crushing interest rates that rank among the steepest anywhere on the globe, a rising tide of Brazilian businesses are negotiating directly with their creditors to get out from under heavy debt loads — all while sidestepping the expense and complexity of formal bankruptcy court proceedings.
According to the Brazilian Out-of-Court Restructuring Observatory, known as Obre, the number of out-of-court restructuring filings climbed from just 16 in 2021 to 84 last year, touching industries that include manufacturing, mining, retail, agribusiness, and logistics. Another 33 companies have already taken the same step so far this year.
Much of this activity stems from the pressure of a 14.25% benchmark interest rate, known as the Selic rate, which has hit companies especially hard — particularly those that took on large amounts of debt during the pandemic, when that same rate had fallen to a record low of 2%.
But the spike in out-of-court filings is also tied to a 2020 legal reform that strengthened the process in Brazil. Obre director Juliana Biolchi described the change as producing “a cultural shift” in how companies approach financial distress.
Luiz Fabiano Saragiotto, managing partner at Journey Capital, explained that the reform made out-of-court restructurings more adaptable, letting companies leave certain groups of creditors out of negotiations and prompting businesses to address debt problems earlier — before a court-supervised process becomes unavoidable.
Saragiotto said formal, in-court restructuring carries heavy drawbacks because “it involves all creditors, can limit access to financing, damage a company’s reputation and disrupt operations.” He added, “Once a court accepts a restructuring filing, that label tends to stick.”
The out-of-court approach lets struggling companies work directly with select groups of creditors. Once a simple majority approves a restructuring plan, it becomes binding on all creditors in those categories, which prevents individual holdouts from derailing the agreement.
Biolchi noted that this streamlined process has made out-of-court restructuring “increasingly associated with less severe financial distress” compared to the formal court route.
The tool gained significant attention in Brazil in 2024 when retailer Casas Bahia received court approval for an out-of-court restructuring covering approximately 4.1 billion reais, the equivalent of about $784 million. The company stated that the plan had no impact on suppliers, business partners, customers, or employees.
That high-profile case was followed by several others, including furniture retailer Tok&Stok, also in 2024. More recently, retail group GPA filed in March seeking court approval to reorganize roughly 4.5 billion reais in debt. Companies in agriculture, currently carrying heavy debt burdens, have also embraced the approach.
Boosted by Raizen’s massive deal, the combined debt of companies pursuing out-of-court restructurings has surpassed 109 billion reais in 2026 — up sharply from 41.5 billion reais in 2024 — and financial markets have felt the effects.
Caio Viggiano, managing director for fixed income at investment bank Itau BBA, said that “investors today are more concerned about credit risk,” pointing to global conflicts, elevated interest rates, and the surge in corporate restructurings as contributing factors.
Analysts expect the number of out-of-court restructuring cases to keep climbing in the months ahead. Among those reportedly considering the option is Oncoclinicas, described as Latin America’s largest oncology treatment provider, according to local media reports and a source familiar with the discussions. Oncoclinicas declined to comment on the matter.
