Agrogalaxy Secures Approval for Debt Recovery Plan After Intense 12-Hour Assembly

Agrogalaxy, one of Brazil’s largest agricultural input distributors, gained approval for its Judicial Recovery Plan (PRJ) after a marathon 12-hour creditors’ meeting.

Facing debts exceeding R$ 4.6 billion, the company filed for judicial recovery in September 2024. The meeting, held at the 19th judicial court in Goiânia, concluded early on April 10, 2025, with 1,376 votes in favor, 34 against, and 23 abstentions.

The plan’s approval allows Agrogalaxy to begin debt repayments based on priority classes. Labor creditors (Class I) will receive payments first, followed by unsecured creditors (Class III) and small businesses (Class IV).

Votes in favor included 149 from labor creditors, 1,160 from unsecured creditors, and 67 from small businesses. However, major financial institutions like Itaú, Citibank, and ABC Brasil opposed the plan.

During the assembly, legal representatives revised several clauses to address creditor concerns. One contentious issue involved defining financial creditors linked to grain flows and their payment terms.

The final document introduced restructuring debentures across five series. Creditors in the fourth and fifth series can convert debts into equity. Despite limited interest in this option, Banco Santander expressed willingness to participate.

Agrogalaxy’s Struggles and Recovery Plan

Agrogalaxy’s financial woes stem from operational challenges and mounting debts. In the third quarter of 2024 alone, it reported a R$ 1.58 billion loss—a staggering 1,679% increase compared to the prior year.

The company has since closed half its stores and reduced its workforce by 40%. The PRJ aims to stabilize operations while addressing creditor demands. The plan outlines specific repayment terms. Labor claims up to 150 minimum wages will be paid within one year.

Unsecured creditors face an 85% debt reduction with repayment over up to 16 years following a three-year grace period. Strategic partners who maintained business ties post-recovery filing will receive full repayment within ten years.

To raise liquidity, Agrogalaxy plans to sell overdue receivables worth R$ 683 million for an estimated R$ 292 million upfront. It also proposed reverse auctions prioritizing creditors accepting larger discounts.

This approval marks a critical step for Agrogalaxy’s recovery and highlights the challenges facing Brazil’s agricultural input sector amid economic pressures.

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