Extrajudicial recovery soars in Brazil; understand why more companies follow this path

Debt of R$65.1 billion leads Raízen to extrajudicial recovery
Raízen's request for extrajudicial recovery, with debts of R$65.1 billion, caught the market's attention in 2026. But the giant in the sugar and ethanol sector is far from being an isolated case.
After years of high interest rates, among the highest in the world, a growing number of Brazilian companies have sought to negotiate with creditors outside of court to avoid the costs and impacts associated with judicial recovery.
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Requests for extrajudicial recovery jumped from 16, in 2021, to 84 last year. The cases involve companies from sectors such as industry, mining, retail, agribusiness and logistics, according to the Brazilian Observatory of Extrajudicial Recovery (Obre).
In 2026, so far, another 33 companies have followed the same path.
This increase reflects the weight of the basic interest rate, currently at 14.25% per year, on many Brazilian companies, especially those that took out large loans during the pandemic, when the Selic fell to a historic low of 2% per year.
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But this movement is also the result of a reform approved in 2020, which strengthened the mechanism in Brazil and promoted "a cultural change", according to Juliana Biolchi, director of Obre.
According to Luiz Fabiano Saragiotto, partner at Journey Capital, the update made extrajudicial restructuring more flexible. The change allowed companies to exclude some classes of creditors and encouraged the start of debt negotiations before it was necessary to resort to judicial recovery.
According to Saragiotto, judicial restructurings are complex and costly because "they involve all creditors, affecting the company's reputation and access to lines of credit, in addition to the maintenance of the business itself."
"The moment a request for judicial recovery is granted, the company gets this damn stamp", he adds.
Simplest solution
Understand why Estrela filed for judicial recovery
Extrajudicial recovery allows companies in difficulty to negotiate directly with specific groups of creditors. After being approved by a simple majority, the plan becomes valid for all creditors of the affected classes, preventing those who rejected the agreement from being able to block it.
According to Biolchi, the simplicity of the process in relation to judicial recovery meant that it became "increasingly associated with less acute financial crises".
The mechanism gained more visibility in 2024, when the retail chain Casas Bahia obtained judicial approval for an extrajudicial recovery of around R$4.1 billion.
According to the company, the plan did not affect suppliers, commercial partners, customers or employees.
After Casas Bahia, other cases of great repercussion came, such as that of the Tok&Stok furniture chain, also in 2024. Among the most recent requests is that of GPA, which, in March, requested approval to reorganize a debt of around R$4.5 billion.
Agribusiness companies, a sector that faces a high debt, have also started to resort to the mechanism, indicating that its use has spread across different areas of the economy.
Driven by the Raízen case, the volume of debt of companies that requested extrajudicial recovery in 2026 already exceeds R$109 billion. In 2024, this total was R$41.5 billion, reflecting the progress of the movement and its impacts on the market.
"Investors are much more concerned about credit risk than they were in the past," said Caio Viggiano, director of the fixed income area at Itaú BBA. According to him, global conflicts, high interest rates and the wave of corporate restructuring explain this change.
Experts believe that the number of extrajudicial recoveries should continue to grow in the coming months.
Oncoclínicas, the largest cancer treatment company in Latin America, is among the companies evaluating using the mechanism, according to press reports and a source with knowledge of the discussions. When contacted, the company refused to comment.
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Source: G1