The Raízen Power Struggle: Creditors Want the Money, the Equity, and the Chairman 

The Rio Times, the Latin American financial news outlet, reports that the Raízen creditors’ fight has escalated from a financial restructuring into a full corporate governance battle. Bloomberg reported Thursday that bondholders have submitted a new proposal demanding approximately R$8 billion in fresh capital — more than double the R$4 billion that Shell (R$3.5 billion) and Cosan founder Rubens Ometto (R$500 million) had previously committed.

The most explosive element is not the money but the governance demand: creditors want Ometto removed as Raízen’s chairman as a condition of the deal. Raízen, Cosan, and Ometto all declined to comment.

What the Raízen Creditors Want — and Why They Want Ometto Out

The bondholders’ proposal is straightforward in its ambition: they want up to 90% of Raízen’s equity in exchange for converting 45% of their debt claims into shares. This would make the creditor group the dominant shareholder, effectively displacing both Shell and Cosan from control of Brazil’s largest sugar and ethanol producer. The demand for Ometto’s removal signals that creditors view the current governance structure as part of the problem, not just the balance sheet.

The proposal is likely to face fierce resistance. During high-stakes meetings in New York last week, both Shell and Cosan pushed back against demands for additional capital beyond the R$4 billion already pledged. Shell has not commented publicly, and Cosan — itself carrying R$9.8 billion in net debt — lacks the financial capacity to match a significantly larger commitment.

The Timeline: June 6 Deadline and No Deal

Raízen filed Brazil’s largest-ever extrajudicial restructuring in March, covering R$65 billion in debt across bonds, bank loans, and local securities. The company faces a June 6 legal deadline to secure sufficient creditor support for an out-of-court agreement. If negotiations fail, Raízen could be forced into full judicial recovery — the Brazilian equivalent of bankruptcy protection — which would likely be more destructive for all parties.

The earlier proposal had offered creditors up to 70% of ordinary shares through a debt-for-equity swap. The new 90% demand represents a significant escalation — creditors are effectively saying the previous terms undervalued their claims. With all three rating agencies having classified Raízen as in or near default, and bonds trading at roughly 30 cents on the dollar, bondholders have little to lose by pushing harder.

Brazil’s Corporate Distress Wave

Raízen’s escalation is not happening in isolation, as Brazil’s corporate debt landscape has deteriorated sharply in recent months and soured investor sentiment toward the country’s credit markets. Supermarket chain CBD/Pão de Açúcar has filed its own extrajudicial restructuring, healthcare companies Alliança Saúde and Oncoclínicas have sought temporary judicial protection, and Braskem and HIG Capital’s Kora Saúde are also evaluating restructuring measures. The common thread is Brazil’s punishing interest-rate environment — with the Selic at 14.25% — combined with aggressive expansion strategies funded by cheap debt during the low-rate era that have left balance sheets structurally vulnerable.

The Raízen case, at R$65 billion, remains the largest and most consequential test of whether Brazil’s extrajudicial restructuring framework can resolve a crisis of this scale before it becomes a courtroom battle. Less than five years ago, Raízen raised $1.3 billion in Brazil’s largest IPO of 2021, valued at R$76 billion on the promise of becoming the world’s leading cellulosic ethanol producer. Today, creditors are offering to take the company off the hands of both its founders — and demanding its chairman leave the building as part of the price.