“2.273 Companies filed for Judicial Reorganization, the highest number since the creation of the mechanism”

Twenty years after its enactment, Law No. 11.101 of February 20, 2005, has undergone significant developments in its application, largely due to the efforts of various legal practitioners to adapt it to the needs of the Brazilian market (judges, attorneys, legal scholars, public prosecutors, government counsel, among others) and to the legislative amendments introduced since it came into force.

Judicial reorganization has become so rapidly and intensely integrated into the Brazilian legal system that it is now unthinkable to conceive of it without this essential tool for resolving corporate distress.

It can be confidently stated that the law is more important today than ever before. In 2024, 2,273 companies or corporate groups filed for judicial reorganization, the highest number since the creation of the mechanism. This figure far surpassed the previous historical peak in 2016, when there were 1,863 filings. The number of filings in 2024 represents a 61.8% increase compared to 2023.

The number of bankruptcy filings was also significant: in 2024, 949 companies or corporate groups filed for self-bankruptcy.

In 2025, to mark the twentieth anniversary of Law No. 11.101, the Superior Court of Justice (STJ) republished and updated the so-called “Jurisprudência em Teses” — an official document compiling its case law on insolvency matters (covering both judicial reorganization and bankruptcy proceedings).

It is important to highlight recent developments in the Superior Court of Justice’s jurisprudence — the Court being the ultimate interpreter of federal law in Brazil — which have contributed to the evolution of judicial reorganization in the country.

In the judgment of Special Appeal No. 2.123.959/GO, the Third Panel of the STJ revisited the nature of the guarantor's claim after settling the debt of a company under judicial reorganization. Is the guarantor’s claim subject to the judicial reorganization proceeding?

Until then, the prevailing understanding within the Court was that such claims were not subject to judicial reorganization, as they arose upon the enforcement of the guarantee, and therefore after the filing for judicial reorganization — the relevant date for determining whether claims are subject to the proceeding, pursuant to Article 47 of Law No. 11.101. Under this reasoning, the guarantor would retain the right to seek recourse against the principal debtor independently, outside the judicial reorganization framework.

However, the STJ’s Third Panel overturned this position, holding that the guarantor, upon satisfying the debt on behalf of the principal debtor, is subrogated into the original creditor’s position — that is, becomes part of a credit relationship that already existed prior to the filing for judicial reorganization. Therefore, the guarantor’s claim is subject to the judicial reorganization.

This precedent represents a significant shift in the STJ's understanding of the matter, although it does not yet constitute binding case law. The legal community continues to closely monitor the consolidation of the STJ's stance on this critical issue.

In Special Appeal No. 2.163.463/SP, the STJ addressed the relationship between arbitration and judicial reorganization. The case concerned the validity of an arbitral award that declared the set-off of debts involving a company under judicial reorganization.

The São Paulo Court of Appeals had upheld the arbitral award’s validity, reasoning that the award merely acknowledged the existence of a set-off that occurred prior to the judicial reorganization filing.

The STJ, however, took the opposite view: it held that the exclusive jurisdiction to assess the set-off of claims involving a company under judicial reorganization lies with the reorganization court, and thus any arbitral award on this matter must be considered null due to objective non-arbitrability. In other words, the STJ held that arbitral tribunals lack jurisdiction to declare the set-off of claims involving companies under judicial reorganization.

In this decision, the STJ reaffirmed the permissibility of companies under judicial reorganization participating in arbitration as a dispute resolution mechanism (subjective arbitrability) but set limits on arbitral tribunal jurisdiction, particularly regarding mandatory matters such as the subjection of a given claim to the effects of judicial reorganization (objective arbitrability). While the decision does not exhaust the topic, it represents the STJ’s most recent and detailed position on the interplay between arbitration and judicial reorganization in Brazil.

The year 2024 also saw a significant surge in judicial reorganization filings within the agribusiness sector. There were 1,272 such filings, accounting for 55.9% of all filings recorded that year. In 2023, the sector had 534 filings, marking an extraordinary 138% increase within a single year.

Multiple economic factors contributed to this trend, notably rising interest rates, agricultural input inflation, exchange rate instability, and climatic challenges. It is essential to underscore the role of insolvency law in this scenario.

In 2020, when Law No. 11.101 was amended, a key development concerned the judicial reorganization of rural producers. The law was modified to allow individual farmers to file for judicial reorganization, provided they met the applicable legal requirements regarding the registration of their business activity.

In 2024, 566 rural producers filed for judicial reorganization. The historical growth is remarkable: in 2021 — the first year such filings became possible — there were 13 cases. In 2022, this rose modestly to 20. In 2023, the number reached 127, which then grew by over 400% in 2024.

It is evident that the amendment to Law No. 11.101 enabled the expanded application of judicial reorganization to the agribusiness sector, further solidifying its role as a legal tool for addressing corporate crises.

Finally, 2024 was also marked by legislative reform discussions, with the introduction of Bill No. 3 of 2024, aimed at amending Law No. 11.101 to enhance the bankruptcy regime.

Bill No. 3 of 2024 is premised on the view that bankruptcy proceedings in Brazil are “slow and ineffective,” seeking to “expedite decision-making in bankruptcy cases, improve access to information regarding the proceedings, and modernize their governance.”

To that end, the bill proposes mandatory adoption of a “bankruptcy plan,” to be prepared by the court-appointed trustee and approved by creditors, setting guidelines for asset evaluation and sale, as well as creditor payment, including potential haircuts and extended payment terms. Additionally, the bill contemplates the creation of a “fiduciary manager,” who may, upon creditors’ resolution, replace the court-appointed trustee and perform its duties.

Beyond its innovations, the bill also seeks to consolidate and modify existing practices, such as the procedural mechanism for piercing the corporate veil in bankruptcy cases, which would henceforth be centralized within the bankruptcy court.

Twenty years after its enactment, it is clear that Law No. 11.101 remains essential and widely applied by legal practitioners. Filings for judicial reorganization and bankruptcy have never been more frequent, reflecting the confidence that this legal instrument has earned within society. The legislative and jurisprudential developments over the past two decades have certainly contributed to consolidating these mechanisms within the Brazilian legal system.