Brazilian small businesses see surge in judicial recovery filings

Micro and small enterprises (MPEs) in Brazil are experiencing a significant surge in judicial recovery filings. According to the Monitor RGF-BizDoc, there were 2,821 MPEs under judicial protection in June, representing a 41.4% increase compared to the same month in 2025.

This growth rate is nearly double the 21.2% increase seen among medium and large companies. The retail sector has been particularly affected. The rise is attributed to prolonged high interest rates, which have increased credit costs, and a decline in consumer spending due to high household debt.

Experts note that small businesses face unique challenges compared to larger corporations, including less professionalized management and a lack of assets to offer as collateral in creditor agreements. Claudio Damasceno, a partner at RGF Associados/BizDoc, warned that small businesses have a higher risk of bankruptcy during the recovery process due to emotional decision-making and weaker brand strength.