Restructuring and Insolvency Newsletter: Updates for February, March, and April 2026

The Superior Court of Justice held that the Public Treasury may file a bankruptcy petition following an unsuccessful tax enforcement proceeding

The 3rd Panel of the Superior Court of Justice (STJ), in a unanimous decision, reversed its prior position and recognized the Public Treasury’s standing and procedural interest to file a bankruptcy petition against a debtor following an unsuccessful enforcement proceeding. Reporting Justice Nancy Andrighi noted that the inclusion of item IV in article 97 of the Brazilian Bankruptcy Law (Law No. 11,101/2005) granted legal standing to any and all creditors to file a bankruptcy petition, without distinguishing between public and private creditors. The Justice further emphasized that, when the remedies available in tax enforcement proceedings prove ineffective, a bankruptcy petition filed by the Public Treasury is necessary to reach the debtor’s assets and satisfy public claims. Based on this new understanding, the Attorney General’s Office of the National Treasury (PGFN) issued Ordinance No. 903/2026, regulating the filing of bankruptcy petitions against debtors of the Federal Government. This exceptional measure will target only major defaulters with consolidated debts of BRL 15 million or more, and only where attempts to collect through tax enforcement proceedings have been exhausted without success.

São Paulo court limits the effects of out-of-court financing in pre-pack reorganizations

The 3rd Bankruptcy and Judicial Reorganization Court of the São Paulo State Court of Justice authorized the raising of funds through out-of-court financing in a pre-pack reorganization, but held ineffective certain plan provisions that sought to extend to that financing the protections afforded under the Brazilian Bankruptcy Law (Law No. 11,101/2005) to DIP (Debtor-In-Possession) financing in judicial reorganization proceedings. The Brazilian Bankruptcy Law only provides for DIP financing in judicial reorganization proceedings but is silent regarding pre-pack reorganizations. According to the court, although such financing may be obtained in a pre-pack reorganization, any priorities or credit protection must be expressly set forth in the plan and approved by the creditors bound by the pre-pack reorganization. The decision comes amid a broader trend of growing use on pre-pack reorganizations: according to the Brazilian Observatory of Pre-pack Reorganization, between 2005 and 2026, 288 new cases were filed, 231 of them after the reform of the Brazilian Bankruptcy Law, representing more than 80% of all filings of this nature. This growth is linked to an adverse economic environment marked by high interest rates and difficulties in refinancing existing debt. In this context, the decision reinforces the legal limits of pre-pack reorganizations and the need for rigor in structuring financing mechanisms.

São Paulo court blocks the sale of shares in a Brazilian company in a proceeding seeking recognition of a foreign insolvency proceeding in Brazil

An international retailer sought recognition before the Brazilian courts of its foreign insolvency proceeding. Recognition of the foreign proceeding would allow certain protections provided for under Brazilian Bankruptcy Law to apply in Brazil, including a stay of collection efforts and the preservation of assets located in the country. In the case at hand, the dispute concerns the sale of the equity interest held by the foreign company in a Brazilian subsidiary, a transaction considered relevant for generating cash and paying creditors under the restructuring plan approved abroad. The São Paulo court, however, granted interim relief requested by the subsidiary itself and ordered a complete block on the sale of the shares, including suspension of the settlement of transactions already executed on the stock exchange. Broadly speaking, the decision was based on the risk of asset depletion resulting from the sale of those assets. The case is expected to unfold on two main fronts: on the one hand, the discussion of the interim relief granted, which may be subject to appeal or review by the court; on the other hand, the examination of the request for recognition of the foreign proceeding in Brazil.

TCU reverses prior decision and removes restrictions on the use of tax loss carryforwards and negative CSLL basis in tax settlement agreements

The Federal Court of Accounts (TCU) unanimously granted the motion for clarification filed by the Attorney General’s Office of the National Treasury (PGFN), reversing its prior restrictive interpretation, which had treated the use of tax loss carryforwards and the negative calculation basis of the Social Contribution on Net Income (CSLL) (collectively, “PF/BCN“) as equivalent to discounts subject to the 65% cap set forth in Article 11, Paragraph 2, of Law 13,988/2020 for tax settlement agreements (transações tributárias). Accordingly, the TCU recognized the distinction between unilateral discounts and debt-settlement mechanisms, concluding that the use of PF/BCN does not amount to a revenue waiver, since it applies to claims classified as unrecoverable or difficult to recover, in relation to which the Federal Government has no reasonable expectation of collection. Rather, it is a mechanism that enables the recovery of amounts that otherwise would not be collected. In practice, this means that companies may use tax loss carryforwards and negative CSLL basis to settle up to 70% of the remaining amount of their debts, after the application of discounts, in tax settlement agreements. Before this reversal, the issue had been addressed by the Brazilian courts, with several decisions issued in favor of taxpayers removing those restrictions.

CNJ establishes parameters for granting judicial reorganization to rural producers

The National Council of Justice (CNJ) issued Provision No. 216/2026, which sets nationwide guidelines for applications for judicial reorganization and bankruptcy involving rural producers. Signed by Justice Mauro Campbell, the measure seeks to standardize judicial practice and reduce misuse of the mechanism by requiring proof of at least two years of agricultural activity and the submission of tax documents. Among the new measures is the possibility of a preliminary expert assessment using geoprocessing technology to verify actual agricultural production, as well as protections for essential credit transactions, such as barter contracts and the Rural Product Note (Cédula de Produto Rural). The text also regulates the automatic stay period, allowing rural producers to retain essential assets while prohibiting the retention of funds or grain pledged as collateral, thereby reinforcing legal certainty and the stability of rural credit.

As reported by Mattos Filho in its latest Restructuring and Insolvency Newsletter, the guideline is particularly relevant in light of the sharp increase in judicial reorganization filings in agribusiness sector. According to Serasa Experian, filings  rose by 56.4% in 2025, reaching 1,990 filings, the highest volume since the historical series began in 2021. The current economic environment has placed significant pressure on the cash flow of rural producers, especially in states such as Mato Grosso, Goiás, Paraná, Mato Grosso do Sul, and Minas Gerais, which account for the largest share of filings.

Number of companies in judicial reorganization reaches a record high in 2025

The year 2025 marked a historic record for companies in judicial reorganization in Brazil: according to Serasa Experian, there were 977 proceedings involving 2,466 companies. These figures reflect a 5.5% increase in the number of proceedings and a 13% increase in the total number of companies compared with 2024, reaching the highest level since 2016. The increase is most evident in the agriculture and services sectors, followed by trade and industry. With 743 requests, the agriculture sector accounted for 30.1% of the total number of companies, and service providers filed 739 judicial reorganization requests in 2025. Companies in the trade sector totaled 535 fillings, while the industrial sector filed 449 requests for judicial reorganization.

For more information on this topic, please contact Mattos Filho’s Restructuring and Insolvency practice.