Out-of-court restructuring is no longer reserved for companies on the brink of collapse. Braskem, Oncoclínicas, Raízen and GPA show how negotiated debt workouts have become part of the financial toolkit of large Brazilian companies. Filings rose from 16 in 2021 to 84 in 2025, according to the Brazilian Observatory of Out-of-Court Restructuring. In 2026, a handful of multibillion-real cases have already pushed the amount of debt covered by such proceedings above R$100 billion.
There are clear benefits. An operationally viable company should not be dismantled simply because it borrowed too much, suffered a cash-flow decline or allowed maturities to pile up. Out-of-court restructuring allows companies to negotiate selected liabilities, protect suppliers and keep the business running. Compared with a full judicial restructuring, it tends to be narrower, less stigmatizing and potentially less costly.
Yet any mechanism that lowers the cost of a decision also changes the incentives surrounding it. When selling assets, raising equity or asking controlling shareholders for fresh capital appears more expensive than imposing maturity extensions and haircuts on creditors, restructuring stops being merely an emergency response. It becomes a deliberate balance-sheet management decision.
That is where the risk of moral hazard emerges. Companies and their shareholders capture the benefits of leverage when business is strong. When those bets fail, banks and bondholders absorb part of the losses through grace periods, lower interest rates and longer maturities. This does not make every restructuring a strategic default. But it may encourage executives to delay difficult adjustments and controlling shareholders to avoid injecting new capital.
A sound insolvency framework should preserve viable businesses, not necessarily their existing owners. When billions of reais must be renegotiated, shareholders should also bear a meaningful share of the cost through fresh equity, dilution, asset sales or a loss of control. If they retain almost all of their economic position while creditors accept losses, the gains remain private while the downside is transferred elsewhere.
Markets eventually charge for that risk. Creditors may demand higher interest rates, additional collateral and tighter restrictions on dividends, acquisitions and leverage. Americanas offered a reminder of how quickly one large corporate failure can reshape perceptions of credit risk. The cost of restructuring does not disappear; it is brought forward and embedded in the price of credit across the market, affecting even companies that may never use the mechanism.
Brazil’s 2020 insolvency reform was right to make negotiated restructurings easier and reduce unnecessary value destruction. Its success, however, raises a new question. It is no longer enough to ask whether out-of-court restructuring is more efficient than a judicial process. Investors and creditors must also examine how the cost is distributed — and how much remains with the shareholders who took the risk.
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