Brazilian Bankruptcy Petitions Climb in August over July, but Show Year-to-date Decline

RIO DE JANEIRO – Business bankruptcy petitions increased by 58 percent in August compared to July, according to a national survey by Boa Vista. However, in 12 months, the indicator showed a drop of 8.6 percent. The requests for judicial recovery also increased in the period, by 41.3 percent, but decreased by 15.1 percent over 12 months.

According to Boa Vista, the results show a continued downward trend in these indicators over the last 12 months.

“This trend is linked to the improvement in economic conditions since 2017, which has allowed companies to show stronger signs in solvency indicators,” said the credit information company.

However, Boa Vista believes that the continuity of this trend depends on the development of the Brazilian economy in the coming months.

“The financial situation of companies, in general, remains positive, but may be affected by the slow recovery of business activity,” says the company, which deems as positive the prospects of reducing interest rates and the release of the Severance Premium Reserve Fund (FGTS). “Expected positive impacts on sales should give a new breath to the business sector“, evaluates Boa Vista.

The bankruptcy rate also increased by 88 percent in August compared to July but declined by 8.3 percent in 12 months. The Deferred Judicial Recoveries indicator, on the other hand, fell in August compared to the previous month and accumulated a decline of 11.9 percent over 12 months.