Experts criticize new FIDC rules and warn that a R$35 billion funding source will be cut off

Experts criticize new FIDC rules and warn that a R$35 billion funding source will be cut off

National Monetary Council barred the acquisition of credits arising from judicial disputes without a final decision and a determined value

The new rules established by the National Monetary Council (CMN) for Receivables Investment Funds (FIDCs), which came into effect on Tuesday, October 13, caught the financial market by surprise and have been criticized by specialists.

Among the new provisions, the most significant is the prohibition on fund managers acquiring new credits arising from judicial or arbitral disputes that do not yet have a final, non-appealable decision and a determined value. While the measure aims to prevent fraud involving these assets, critics argue that it effectively blocks an important source of funding estimated at R$35 billion and shuts off a liquidity channel for companies and even individuals who have been waiting 15 or 20 years for the resolution of claims against the government or third parties.

“No one understood this decision. The regulator made a mistake by prohibiting the entire market from purchasing this type of asset instead of specifically punishing those committing fraud. By attempting to eliminate fraud risk in a generic way, the CMN ended up shutting down a transparent and regulated market, pushing transactions into environments with less visibility and oversight,” said João Peixoto, CEO of Ouro Preto Investimentos, one of Brazil’s largest FIDC structuring firms, noting that the market was not consulted on the decision.

“It is the same as discovering that one gas station is selling adulterated fuel and then shutting down all gas stations because of it,” Peixoto added.

He acknowledges that serious fraud cases involving certain FIDCs and Banco Master have occurred, but argues that the CMN and the Brazilian Securities and Exchange Commission (CVM) should identify, investigate, and punish the bad actors rather than closing the door on an entire industry that operates legitimately.

Peixoto explains that FIDCs backed by claims arising from judicial disputes provide one avenue through which individuals and companies waiting decades for legal proceedings against the government or third parties can monetize those assets. By prohibiting the acquisition of claims that are still under dispute, he says, the CMN has effectively excluded roughly 95% of negotiable assets and made these products unviable:

“By requiring funds to acquire only final, settled claims with no associated risk, what we call a ‘perfect asset,’ the regulator has excluded approximately 95% of negotiable assets. Credit holders with final-stage, risk-free claims do not sell them at a discount. Discounts occur precisely when litigation is expected to last for years and the holder needs immediate liquidity,” said the CEO of Ouro Preto Investimentos.

Peixoto also notes that these funds are exclusively available to professional investors who understand the market and have the risk appetite required for this type of investment.

New rules

The resolution establishes that FIDCs may acquire judicial assets only after a final, non-appealable judgment has been issued in the merits phase of the proceeding and after the liquidation phase has been completed, with no outstanding appeals, objections, or challenges by the debtor.

The restriction applies not only to direct acquisitions but also to indirect exposures through fund-of-funds structures, derivatives, contracts, or offshore vehicles.

The regulatory change follows investigations into alleged money laundering schemes and balance-sheet price manipulation involving financial institutions, particularly Banco Master, and coincided with the launch of the third phase of Operation Hidden Carbon on September 24.

“The new resolution approved by the CMN introduces a series of enhancements aimed at strengthening the consistency and reliability of valuation and pricing processes, while expanding the level of detail and transparency of disclosed information,” the Ministry of Finance said in a statement.

Richard Ionescu, CEO of the IOX Group, which manages FIDCs, believes the measure will narrow an important source of advance liquidity for companies.

“For many companies, this was a way to transform an asset with an uncertain maturity and that sat off the balance sheet into immediate cash. Now, those companies will have to wait until the credit is fully consolidated or seek buyers outside this universe, generally at a higher cost of capital,” he said.

The market viewed the less-than-three-week period between publication of the resolution and its October 13 effective date as extremely short, causing significant disruption among fund managers.

According to managers operating in the sector, there has been a “desperate rush” to complete credit assignments before the ban takes effect, reducing the time available for due diligence reviews and ultimately increasing transaction risk during the transition period.

In addition, industry participants argue that the prohibition will not stop transactions involving these credits but will instead drive them toward other structures, such as securitization vehicles and Special Purpose Entities (SPEs), which fall outside the CVM’s supervisory perimeter. In practice, specialists say, this may increase fraud risks while reducing transparency.

Contradictions in the new framework

Specialists have also pointed to what they see as a contradiction in the resolution: judicial claims currently held in fund portfolios do not need to be sold, but beginning on January 4, 2027, their value must be audited and continuously reassessed whenever new developments arise in the underlying proceedings. Experts argue that this requirement will significantly increase costs for fund managers.

Managers and administrators will be required to submit monthly reports to the Central Bank, the CVM, and the Federal Revenue Service, including case numbers, the true identities of buyers and sellers, and the complete history of assignments related to litigation claims and court-ordered government debt instruments held by FIDCs.

The CVM reports that direct FIDC exposure to ongoing litigation totals approximately R$35.2 billion. Based on monthly filings submitted by 423 FIDCs, a total of R$64.2 billion is allocated to judicial assets and court-awarded claims, including assets whose value has already been liquidated.

Priscilla Santos, partner at Tauil & Chequer Advogados associated with Mayer Brown, who closely follows and advises participants in this market, believes that if the regulator recognizes that transparency and audit mechanisms can adequately control risks associated with the existing portfolio of assets, the same rationale should have been applied to permit new acquisitions rather than effectively eliminating an entire market.

She also notes that funds investing in claims arising from judicial disputes are intended for qualified and professional investors with extensive market knowledge and a willingness to assume risk.

“Today, FIDCs are the largest form of non-bank financing. Now we will have two different sets of rules for the same asset: a prohibition on acquiring new claims and, at the same time, new valuation transparency requirements. We believe that, just as there are ways to supervise the stock of litigation assets already held by funds, similar rules could have been adopted for new acquisitions,” she said.

Including all categories, FIDCs reached a record R$779.2 billion in active credit portfolios in July 2026, consolidating their position as one of the leading alternatives to bank financing, particularly in a high-interest-rate environment.

Edgar Araújo, CEO of Azumi Investimentos, a FIDC structuring and fiduciary administration firm, observes that the new rules may affect liquidity and trading conditions for disputed claims. For assets already held in fund portfolios, however, the resolution strengthens transparency and traceability, mitigating information asymmetries and reducing the risk of improper use of these structures.

“The effectiveness of these measures will depend on the quality of supervision, governance, and controls adopted by market participants. The goal of increasing transparency, security, and investor protection is legitimate. The debate concerns the calibration of the measure and the potential economic effects of the restrictions imposed,” Araújo said.

He adds that while the new rules reduce uncertainty, they may also limit the activity of specialized vehicles designed to assess and assume litigation-related risks.

“More transparency,” says specialist

For João Bandeira, director of Bandeira Investimentos, a company that purchases claims and advances receivables, the CMN resolution is moving in the right direction by bringing greater transparency, protection, and security to the market.

He notes that the regulation effectively distinguishes between mature and liquid judicial assets, such as consolidated government claims, and claims still in litigation, where it is difficult to accurately measure the likelihood of recovery or the asset’s value.

“This eliminates opacity loopholes, such as fund-of-funds structures with no identification of the ultimate investor, which have been used irresponsibly or even criminally to conceal assets and launder money,” he explained.

According to Bandeira, the requirement for monthly external audits will increase acquisition costs, which may ultimately be reflected in larger discounts offered to claim holders or lower returns for investors. In exchange, however, investors gain greater security because they will be able to assess the precise risk profile of each asset through the fund’s disclosure documents.

He further notes that Brazil has taken a stricter approach by categorically banning the acquisition of disputed claims by FIDCs, whereas markets such as the United States have established regulated and mature vehicles dedicated to litigation finance, under which investment funds or specialized firms cover all costs associated with litigation or arbitration proceedings on behalf of one of the parties.

Organizations including the Brazilian Private Equity and Venture Capital Association (ABVCAP), the Brazilian Association of Special Situations and Litigation Finance, and the National Association of Participants in Receivables Investment Funds (ANFIDC) signed a public statement arguing that the measure represents a “step backward for the capital markets and favors banking concentration.”

The associations stated that while they support the anti-money laundering, anti-fraud, and traceability objectives of the resolution, the measure was adopted without consultation with society or market participants.

They are calling for the decision to be reviewed or postponed and for less restrictive rules to be discussed for the sector. The Brazilian Financial and Capital Markets Association (ANBIMA), which represents financial institutions including banks, asset managers, and brokerages, said it is currently evaluating the impacts of the measure and its potential effects on the market.