Vol 23 (2026) - Issue 3

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The Brazilian Insolvency System

Synopsis
In recent decades, corporate insolvency has consolidated itself as a central theme within contemporary business law. This prominence is largely due to the sequence of financial and economic crises that Brazil has faced since 2014.
The financial crisis that began that year marked the onset of a deep economic recession, resulting from a combination of internal and external factors. The situation was aggravated by rising inflation, the devaluation of the Brazilian real, and increasing unemployment rates, culminating in a sharp GDP contraction between 2015 and 2016 – recognised as the longest and most severe recession in the country’s recent history.
This environment of economic instability directly impacted the corporate sector, leading to a significant increase in bankruptcy filings and, above all, judicial reorganisation proceedings. Brazilian society, the State, and the legal community gradually came to recognise more clearly the importance of preserving and supporting financially viable companies, given the positive effects that their continued operation generates for the
economy and the labour market.
Nevertheless, statistical data reveal a persistently low success rate of reorganisation proceedings, inferior not only to that observed in developed countries but also to that of neighbouring South American jurisdictions.
In light of this scenario, it becomes essential to examine the economic rationale underlying the insolvency system, in order to understand why, in many cases, the legal mechanisms established by Law No. 11,101 of 9 February 2005 – particularly judicial reorganisation – fail to achieve their intended outcomes.
The reflection proposed in this study is based on the premise that addressing corporate financial distress, especially within the context of judicial reorganisation, requires an integrated approach in which legal reasoning and economic analysis operate harmoniously and complement one another.
The purpose is to demonstrate that the interpretation and application of the statutory provisions governing corporate reorganisation in Brazil must enable the decision-maker to effectively safeguard the public and social interests protected by the insolvency and reorganisation framework – such as job preservation, tax revenue collection, and the circulation of goods, products, and services – rather than prioritising the individual interests of debtors or creditors.