Brazil's corporate out‑of‑court debt restructurings surge as interest rates hit 14%

Brazil is witnessing a rapid increase in out‑of‑court debt restructurings after years of extremely high interest rates, currently at 14.25% annual. Filings rose from 16 in 2021 to 84 last year, and 33 companies have followed the same path so far in 2024, covering sectors such as manufacturing, mining, retail, agribusiness and logistics, according to the Brazilian Out‑of‑Court Restructuring Observatory (Obre).

The trend was accelerated by a 2020 legal reform that made the mechanism more flexible, allowing companies to exclude certain creditor classes and to negotiate earlier, which officials described as a “cultural shift.” High‑profile cases include sugar‑ethanol giant Raizen’s $12.5 billion restructuring, retailer Casas Bahia’s R$ 4.1 billion plan, furniture chain Tok&Stok, and retail group GPA’s R$ 4.5 billion debt reorganisation. Combined out‑of‑court debts have climbed to over R$ 109 billion in 2026, up from R$ 41.5 billion in 2024, prompting investors to flag heightened credit risk.

Analysts say the surge reflects the burden of borrowing heavily during the pandemic when the benchmark Selic fell to a record‑low 2%, and it underscores growing market concerns about Brazil’s corporate credit landscape.