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Brazil's Corporate Distress Hits a Record — and the Pipeline Points to More

Judicial-recovery filings swept up a record 2,466 companies in 2025 (+12.9%), led by an agribusiness blowout, with defaults still climbing into 2026.

Brazil set an all-time record for corporate distress in 2025: 2,466 companies entered judicial recovery (recuperação judicial), up 12.9% and the most since the series began in 2012, spread across 977 court filings. The epicenter was agribusiness — 1,990 filings, up 56.4% — clustered in the soy-corn-cotton-cattle belt of Mato Grosso, Goiás and Paraná.

Tellingly, formal bankruptcies fell 19%: firms are choosing reorganization over liquidation, turning judicial recovery from a last-rites mechanism into a balance-sheet-management tool.

Source: Serasa Experian via InfoMoney. Figures are full-year 2025 sector shares of companies under judicial recovery.

A high-rate squeeze meeting weak cash flow

The driver is a prolonged collision of expensive financing and stalled revenue. The Selic peaked at 15% in June 2025, held there roughly nine months, and even after two cuts sits at 14.50% — still deeply restrictive. Growth has flatlined (Q4 2025 GDP +0.1% QoQ), compressing top lines just as interest expense stays high. Serasa's economists call the easing so far "insufficient" to reverse credit conditions.

In agriculture, record harvests have not helped: thin commodity prices, dollarized input costs and over-leverage have crushed margins. The damage is already migrating to lenders — Caixa's problematic agribusiness book roughly tripled in a year, to about R$12bn.

What it signals for EM investors

The pipeline points to another record in 2026. Defaults precede recovery filings, and defaulting CNPJs hit a fresh record of 9.0 million in April 2026, up 1.5 million year-on-year, with micro and small firms (8.5M) most exposed. The YoY growth in recovery cases is decelerating (+36.2% in 2023, +26.4% in 2024, +12.9% in 2025) — read this as broadening, late-cycle stress, not a peak.

For credit investors, deterioration is concentrated in SMEs and rural lending, leaving public banks most exposed and reinforcing a bank-downgrade cycle (Citi and BofA both cut Nubank on credit risk). Watch the Senate's rural-debt refinancing bill — up to R$800bn over a decade on the government's own math — a farmer backstop that doubles as a fiscal risk. For small-caps, distress is overwhelmingly an unlisted and rate-sensitive story; with the market pricing Selic toward 13.50% by year-end, any disinflation surprise is the key upside catalyst for the distressed cohort.