2026年10月16日
Debt Restructuring Wave Expected to Continue Through 2027, says Tauil & Chequer Partner
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Source: Broadcast | Agência Estado
The market is expected to face a growing number of judicial and out-of-court restructurings through at least 2027, despite forecasts of lower interest rates. The continued erosion of consumers’ purchasing power is likely to weigh on consumption and, consequently, on companies’ revenue generation. This is the outlook of Liv Machado, Restructuring and Bankruptcy partner at Tauil & Chequer Advogados in association with Mayer Brown.
“The expectation is that, over the coming months and into next year, we will continue to see this wave of judicial and out-of-court restructuring filings,” Machado says. According to her, interest rates are likely to decline gradually and not by enough to significantly ease companies’ debt costs or improve access to new credit. Machado notes that the number of judicial restructuring filings has already reached a record high, with no clear signs of a reversal.
The good news is that the dynamics of restructuring negotiations have evolved, particularly as out-of-court restructuring has emerged as a more efficient alternative for both debtors and creditors than judicial restructuring. Data from the Brazilian Out-of-Court Restructuring Observatory (OBRE) show that between 2020, when Brazil’s judicial restructuring and bankruptcy law was amended, and 2026, the number of court filings rose from 57 to 288.
The key difference between out-of-court and judicial restructuring is that, in the former, a company only needs to secure the support of 50% plus one of its creditors for a debt restructuring plan within 90 days for the plan to be approved by the court. In most cases, out-of-court restructurings do not involve labor claims or supplier debt.
In judicial restructurings, by contrast, proceedings are overseen by a judge, involve several stages and encompass all categories of creditors. This creates greater scope for litigation and requires the restructuring plan to be approved at a creditors’ meeting, which may need to be convened more than once. The process can take at least one year.
“Out-of-court restructuring has been well received by creditors because it is faster and less costly, while giving them greater opportunity to participate in shaping the plan,” she says. As a result, she adds, the prospects for recovering their claims improve.
Creditors’ positive reception of out-of-court restructuring has even allowed for a degree of creativity in how the mechanism is used in practice.
In more recent cases, companies have negotiated and effectively developed their debt restructuring plans during the 90-day period provided by law to secure majority creditor support for a pre-negotiated version of the plan. To file for out-of-court restructuring, a company must initially have the support of 33% of its creditors.
“It is not exactly what the law provides for, but it has been happening in practice precisely because creditors prefer to use this 90-day window to negotiate and avoid judicial restructuring,” Machado says.
Out-of-court restructuring filings involving what has come to be known as a “plan for the plan” have occurred in cases involving Grupo Pão de Açúcar, Raízen and Braskem.
According to Machado, this positive perception also extends to creditors who are “dragged along” by the majority’s decision, despite not having signed the plan, provided they are engaged in the process and not disregarded by the company from the outset.
“We see a smoother process in cases where the debtor is transparent, with these creditors trusting that the best possible measures are being taken, even if they did not vote on the decisions,” she says.
On the other hand, when creditors do not participate in the negotiations at all and lack access to information, Machado adds, the likelihood of litigation increases, potentially resulting in the process evolving into a judicial restructuring.
A Recent Development
Creditor participation in debt restructuring proceedings is relatively new in Brazil. This is because Brazil’s judicial and out-of-court restructuring and bankruptcy framework originates from models that give greater power to the debtor, unlike the U.S. system, where creditors tend to play a more prominent role in such proceedings.
The presence of capital markets investors at the negotiating table is also relatively recent, changing the dynamics of negotiations that previously tended to involve a small group of banks.
In judicial restructurings specifically, the law was amended in 2024 to allow creditors to submit an alternative restructuring plan if the company’s plan is rejected. However, this mechanism has yet to gain traction. The rule has been tested in only one case, involving Samarco, without success.
“One of the issues, among others, is that a creditor proposing an alternative plan has to waive its collateral,” Machado explains.
“The expectation is that, over the coming months and into next year, we will continue to see this wave of judicial and out-of-court restructuring filings,” Machado says. According to her, interest rates are likely to decline gradually and not by enough to significantly ease companies’ debt costs or improve access to new credit. Machado notes that the number of judicial restructuring filings has already reached a record high, with no clear signs of a reversal.
The good news is that the dynamics of restructuring negotiations have evolved, particularly as out-of-court restructuring has emerged as a more efficient alternative for both debtors and creditors than judicial restructuring. Data from the Brazilian Out-of-Court Restructuring Observatory (OBRE) show that between 2020, when Brazil’s judicial restructuring and bankruptcy law was amended, and 2026, the number of court filings rose from 57 to 288.
The key difference between out-of-court and judicial restructuring is that, in the former, a company only needs to secure the support of 50% plus one of its creditors for a debt restructuring plan within 90 days for the plan to be approved by the court. In most cases, out-of-court restructurings do not involve labor claims or supplier debt.
In judicial restructurings, by contrast, proceedings are overseen by a judge, involve several stages and encompass all categories of creditors. This creates greater scope for litigation and requires the restructuring plan to be approved at a creditors’ meeting, which may need to be convened more than once. The process can take at least one year.
“Out-of-court restructuring has been well received by creditors because it is faster and less costly, while giving them greater opportunity to participate in shaping the plan,” she says. As a result, she adds, the prospects for recovering their claims improve.
Creditors’ positive reception of out-of-court restructuring has even allowed for a degree of creativity in how the mechanism is used in practice.
In more recent cases, companies have negotiated and effectively developed their debt restructuring plans during the 90-day period provided by law to secure majority creditor support for a pre-negotiated version of the plan. To file for out-of-court restructuring, a company must initially have the support of 33% of its creditors.
“It is not exactly what the law provides for, but it has been happening in practice precisely because creditors prefer to use this 90-day window to negotiate and avoid judicial restructuring,” Machado says.
Out-of-court restructuring filings involving what has come to be known as a “plan for the plan” have occurred in cases involving Grupo Pão de Açúcar, Raízen and Braskem.
According to Machado, this positive perception also extends to creditors who are “dragged along” by the majority’s decision, despite not having signed the plan, provided they are engaged in the process and not disregarded by the company from the outset.
“We see a smoother process in cases where the debtor is transparent, with these creditors trusting that the best possible measures are being taken, even if they did not vote on the decisions,” she says.
On the other hand, when creditors do not participate in the negotiations at all and lack access to information, Machado adds, the likelihood of litigation increases, potentially resulting in the process evolving into a judicial restructuring.
A Recent Development
Creditor participation in debt restructuring proceedings is relatively new in Brazil. This is because Brazil’s judicial and out-of-court restructuring and bankruptcy framework originates from models that give greater power to the debtor, unlike the U.S. system, where creditors tend to play a more prominent role in such proceedings.
The presence of capital markets investors at the negotiating table is also relatively recent, changing the dynamics of negotiations that previously tended to involve a small group of banks.
In judicial restructurings specifically, the law was amended in 2024 to allow creditors to submit an alternative restructuring plan if the company’s plan is rejected. However, this mechanism has yet to gain traction. The rule has been tested in only one case, involving Samarco, without success.
“One of the issues, among others, is that a creditor proposing an alternative plan has to waive its collateral,” Machado explains.
