Economic Challenges Drive Surge in Judicial Recoveries Across Brazil
The third quarter of 2024 saw a significant increase in judicial recoveries across Brazil. A total of 433 companies received court approval to negotiate debts with creditors, representing a 13.8% rise compared to the same period in 2023.
Minas Gerais experienced the most substantial growth, with a 19% increase in judicial recoveries. The financial crisis in the state affected 36 sectors, indicating widespread economic challenges.
By the end of September, 297 companies in the state were undergoing restructuring. Notable cases include Coteminas, a major textile company, which filed for judicial recovery with a debt of R$2 billion ($350.9 million).
The Patense Group, an animal feed manufacturer, sought judicial recovery with a debt of R$1.4 billion ($245.6 million).
Despite the significant increase, Minas Gerais remains below the national average on the RGF Judicial Recovery Index (IRJ-RGF). The national index stood at 1.90, meaning nearly two out of every thousand companies in Brazil are negotiating debts judicially.
The crisis in agribusiness has triggered a ripple effect across other sectors, including cargo transport and retail fuel sales. Drought has increased operational costs for companies, driving up prices for inputs and energy.
Rio Grande do Sul maintains the second-highest number of companies in restructuring, while São Paulo leads with 1,255 companies in judicial recovery processes.
Experts note that the curve of increasing recoveries has steepened due to high interest rates creating a snowball effect. Companies are struggling to access credit, and many are resorting to judicial recovery as their only option to avoid bankruptcy.
The trend reflects the complexities of today’s global economy and the resilience needed for companies to survive and restructure in challenging financial conditions.
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