How a Farm Bankruptcy Became a Test of Brazil’s Rule of Law

José Pupin, once among Brazil’s largest cotton producers, says the court-supervised rescue of his farm empire went off the rails. In 2017, his group entered restructuring in Mato Grosso with debts of about R$1.3 billion ($245 million).

Consultants from Fource were brought in to steer the process. Pupin now alleges those same advisers bought up creditors’ claims at steep discounts while running the rescue—turning themselves into dominant creditors and, he says, worsening the hole.

He is asking the court in Campo Verde to cancel Fource’s mandates and order a full accounting. Fource denies any wrongdoing, saying every act was filed in the case record with the family’s knowledge and advisers’ consent.

Behind the headlines is a bigger story. Pupin’s case helped set a national precedent in 2019: Brazil’s Superior Court of Justice said rural producers could include debts from before they formally registered as companies in a restructuring.

That ruling widened the safety net for farmers and ranchers. Now, with agribusiness restructurings rising sharply in 2025, the Pupin dispute has become a litmus test for how fairly these rescues are run—and whether advisers can also play the role of claim-traders without crossing red lines.

How a Farm Bankruptcy Became a Test of Brazil’s Rule of Law

The plot thickens with law-enforcement probes. A Fource partner appeared in the Federal Police’s Operação Sisamnes, which examines alleged trafficking of court decisions involving aides linked to top courts in Brasília and judges in Mato Grosso.

Fource rejects any link to wrongdoing. Pupin’s filing also points to Bom Jesus Agropecuária—under its own court protection—which is said to have bought about R$540 million ($102 million) in Pupin-group credits; a former Bom Jesus executive later became a Fource partner. Bom Jesus has not publicly detailed the rationale.

Why this matters beyond Brazil: If courts conclude advisers can both manage and profit from distressed claims, creditors—from seed suppliers to international banks—will demand higher returns or walk away.

If courts draw firmer lines, credit could get cheaper and cleaner for one of the world’s most important farm belts.

The Campo Verde judge’s next moves—voiding mandates, demanding accounts, or doing neither—will signal how Brazil balances rescue, fairness, and the rule of law.