Restructuring & Insolvency Newsletter: December 2025-January 2026 updates

Superior Court of Justice prohibits blocking payment of non-bankruptcy credits after stay period ends

The 4th Panel of Brazil’s Superior Court of Justice (STJ) unanimously determined that once the stay period for a judicial reorganization has expired, reorganization courts cannot prevent non-bankruptcy creditors (i.e., those holding credits outside the scope of the reorganization) from receiving their credits as a way of ‘saving’ companies. In the case in question, after the stay period had ended, the reorganization court released funds seized in favor of the company subject undergoing reorganization. This led a non-bankruptcy creditor (holding credit secured by the fiduciary assignment of receivables) to file an interlocutory appeal, although it was then dismissed on the grounds that the amounts were necessary for keeping the company in judicial reorganization. In considering the issue, the Superior Court of Justice held that receivables are not considered capital goods, and, therefore, a rule preventing the sale of essential capital goods would not be applicable to the case, especially after the end of the stay period.

Deadline for proving minimum quorum to approve out-of-court reorganization plans declared non-extendable

The 3rd Panel of the Superior Court of Justice unanimously decided that the deadline for proving the necessary quorum to approve out-of-court reorganization plans is non-extendable. In the specific case, the corporate group seeking out-of-court reorganization had managed to convince 48.2% of its creditors to approve its plan by the end of the 90-day deadline. On an exceptional basis, the first-instance court granted an additional 20 days for the group to meet the legal quorum for approval (more than 50% of the creditors covered). However, in the Superior Court of Justice, case rapporteur Justice Ricardo Villas Bôas Cueva took the view that the legal deadline is peremptory. Therefore, there are two alternatives if the minimum legal quorum is not met – either withdraw the request for out-of-court reorganization or convert it into a request for judicial reorganization. Justice Villas Bôas Cueva also clarified that reforms established by Law No. 14,112/2020 made out-of-court reorganization more flexible, meaning that only one-third of creditors are required for the stay period to commence. As a result, the court determined that further flexibility regarding the deadline for attaining quorum for out-of-court reorganization plans would not be appropriate.

Restitution requests for credits arising from ACCs inadmissible in reorganization courts

The 4th Panel of the Superior Court of Justice recently recognized that the restitution of credit originating from an advance on foreign exchange contract (adiantamento a contrato de câmbio – ACC) against a debtor subject to judicial reorganization must occur through common enforcement proceedings, rather than the restitution with the reorganization proceedings. According to the ruling, credits arising from an ACC are entirely outside the scope of judicial reorganization, thus rendering any requests for restitution with the reorganization court inadmissible. Restitution would only be possible if an asset or sum had been collected within the reorganization process, but did not actually belong to the debtor, which is not the case here. This decision demonstrates diverging views between the Superior Court of Justice and state courts regarding the correct way to collect ACC credits when the debtor is undergoing judicial reorganization.

Superior Court of Justice and São Paulo Court of Appeals have exceptionally allowed judicial reorganizations of non-profit associations to continue

In 2025, the Superior Court of Justice established that non-profit associations in Brazil lack standing to file for judicial reorganization. Despite this, the 3rd Panel of the same court has permitted the Cândido Mendes Group’s reorganization proceeding to continue, as it was admitted in 2020 – prior to the court consolidating its position. Justice Rapporteur Nancy Andrighi deemed that ending the reorganization would create legal uncertainty and harm both the entities undergoing reorganization and their creditors, given that the reorganization plan had been carried out and the credits of certain classes of creditors had been settled. Furthermore, the São Paulo Court of Appeals approved the reorganization plan of a social health organization responsible for more than 80% of highly complex procedures carried out on behalf of Brazil’s public health system in the region where it operates. Despite the Superior Court of Justice’s position on the matter, the reorganization court noted there was still no final, unappealable decision in favor of immediately ending ongoing judicial reorganizations or nullifying actions previously carried out.

Supplementary Law No. 225/2026 and new limits on accessing judicial reorganization

In January 2026, Brazil introduced its Taxpayer Defense Code (Supplementary Law No. 225/2026), which has established certain restrictions on ‘persistent defaulters’ (devedores contumazes) in regard to undergoing judicial reorganization. Companies that repeatedly default on substantial tax debts without justification may be formally declared as persistent defaulters by the administrative courts. Under the Taxpayer Defense Code, a default is deemed substantial when debts exceed BRL 15 million with the federal tax authorities, or the respective thresholds established by specific legislation at the state, district, or municipal level. Persistent defaulting occurs when tax liabilities remain unpaid for at least four consecutive assessment periods or six alternating assessment periods within 12 months, while a default is considered unjustified when it occurs without objective grounds. The Code provides that persistent defaulters will be prevented from filing for judicial reorganization or continuing reorganization proceedings that are already underway. Moreover, the Brazilian Treasury will be authorized to request judicial organizations involving persistent debtors to be converted into bankruptcy proceedings. As a result, although tax credits are not directly subject to the effects of judicial reorganization, the new law conditions access to judicial reorganization on compliance with minimum tax compliance standards.

Insolvency in Brazil: Q3 2025 marked by fall in successful judicial reorganizations and increased requests from agribusiness sector

The third quarter of 2025 proved to be a challenging period for Brazilian companies in financial distress. According to RGF Monitor, 37% of companies went bankrupt after their judicial reorganization proceedings were closed, compared to 11% in Q3 2024. In the agribusiness sector, Serasa Experian reported that 628 rural producers and companies filed for judicial reorganization during the same period, a 147% increase on 2024. The state of Mato Grosso saw the highest number of reorganization requests, followed by the states of Goiás and Paraná, with an emphasis on individual rural producers (255 requests). The increase is in line with trends already observed in Q1 and Q2 2025, with a total of 1,582 agribusiness companies undergoing judicial reorganization up to September 2025. On the other hand, out-of-court reorganizations remain predominantly the domain of larger companies – 86.9% of the 125 requests registered in 2025 were of this profile. 210 out-of-court reorganization cases have been recorded in Brazil since 2021.

For more information on these topics, please contact Mattos Filho’s Restructuring & Insolvency practice area.