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Insolvency and creditor claims in Brazil: judicial reorganization, the 180 day stay, creditor votes, out of court plans, bankruptcy ranking and cross border cases

Last verified: 2026-10-27 · Status: Stable

A business debtor active for more than 2 years can file for judicial reorganization (recuperação judicial): once processing is granted, limitation, enforcement and seizures are stayed for 180 days, extendable once, and the debtor must file a plan within 60 days or be declared bankrupt. Creditors vote in four classes; a plan can be approved over a dissenting class (cram down) if it wins more than half of all claims present and the required class votes, and since 2020 creditors may table their own plan; fiduciary lien holders and lessors stay outside the plan. In bankruptcy, labor claims up to 150 minimum wages come first, then secured claims up to the value of the collateral, then tax claims and unsecured creditors; a creditor holding protested titles above 40 minimum wages may petition for bankruptcy, and a UNCITRAL style chapter lets foreign insolvency proceedings be recognized.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.3346 per US dollar for 27 October 2026. The real moved sharply in late October (R$5.0377 on 23 October and R$5.5007 on 26 October), so conversions are for orientation only.

Key facts

Automatic stay in judicial reorganization (extendable once)	180 daysLei nº 11.101/2005 art. 6 § 4, as of 2020-12-24 · in force
Deadline for the debtor's reorganization plan	60 daysLei nº 11.101/2005 art. 53, as of 2005-02-09 · in force
Deadline for creditor objections to the plan	30 daysLei nº 11.101/2005 art. 55, as of 2005-02-09 · in force
Maximum time from grant of processing to the creditors' meeting	150 daysLei nº 11.101/2005 art. 56 § 1, as of 2005-02-09 · in force
Minimum regular activity to file for reorganization	2 yearsLei nº 11.101/2005 art. 48, as of 2005-02-09 · in force
Labor claim priority cap per creditor in bankruptcy (150 minimum wages, 2026)	243150 BRLLei nº 11.101/2005 art. 83 I; Decreto nº 12.797/2025, as of 2026-01-01 · in force
Protested debts needed for a creditor's bankruptcy petition (more than 40 minimum wages, 2026)	64840 BRLLei nº 11.101/2005 art. 94 I; Decreto nº 12.797/2025, as of 2026-01-01 · in force
Recognition of foreign insolvency proceedings	Yes, Chapter VI-A (UNCITRAL style, 2020) Lei nº 11.101/2005 arts. 167-A onwards, as of 2020-12-24 · in force

The rule

1. A debtor may file for judicial reorganization if it has been regularly active for more than 2 years and is not bankrupt, has not obtained reorganization in the last 5 years and has no controller or manager convicted of a bankruptcy crime. The petition must explain the crisis and include 3 years of financial statements, a complete list of creditors with the nature and updated value of each claim, the list of employees, bank statements, protest certificates, the list of lawsuits and arbitrations and a detailed tax liability report.Lei nº 11.101 of 9 February 2005 (Insolvency Law), as amended by Lei nº 14.112 of 24 December 2020, Arts. 48 caput and items I to IV; 51 items I to XI, 2020-12-24 official text · verified 2026-10-27

2. When the court grants processing, limitation on debts subject to the procedure is suspended, enforcement actions are stayed and any retention, attachment, seizure or other judicial or out of court constraint on the debtor's assets is prohibited. In reorganization these effects last 180 days from the grant, extendable once by the same period in exceptional cases if the debtor did not cause the delay. If the plan has not been voted when the period ends, creditors may present an alternative plan within 30 days.Lei nº 11.101 of 9 February 2005, as amended by Lei nº 14.112 of 24 December 2020, Art. 6 caput items I to III and §§ 4 and 4-A, 2020-12-24 official text · verified 2026-10-27 · changed: Lei nº 14.112 of 24 December 2020 allowed a single extension of the 180 day stay and gave creditors the right to present their own plan.

3. All claims existing on the filing date are subject to reorganization, even if not yet due, but creditors keep their rights against co obligors and guarantors. Fiduciary owners of movable or real property, lessors under leasing and sellers with retention of title are not subject to the plan, and their property rights prevail, although essential capital goods cannot be removed during the stay. Advances on foreign exchange export contracts (ACC) are also excluded.Lei nº 11.101 of 9 February 2005, Art. 49 caput and §§ 1, 3 and 4; art. 86 item II, 2005-02-09 official text · verified 2026-10-27

4. The debtor must present the plan within 60 days of publication of the decision granting processing, failing which the case is converted into bankruptcy; the plan must describe the means of recovery, show economic viability and include an appraisal of assets. Any creditor may object within 30 days of the publication of the list of creditors, and an objection triggers a creditors' meeting, which must be held within 150 days of the grant of processing.Lei nº 11.101 of 9 February 2005, Arts. 53, 55 and 56 caput and § 1, 2005-02-09 official text · verified 2026-10-27

5. Creditors vote in four classes: labor and work accident claims; secured claims; unsecured, privileged and subordinated claims; and claims of micro and small businesses. In the secured and unsecured classes the plan needs creditors holding more than half of the claims present and a simple majority by head; in the labor and small business classes, a simple majority by head. If a class rejects it, the judge may still confirm the plan if it obtained more than half of all claims present, approval of the required number of classes and more than one third in the dissenting class, without discriminating within that class. If the plan is rejected, creditors may vote to present their own within 30 days, which needs written support of more than 25 percent of all claims or more than 35 percent of claims present.Lei nº 11.101 of 9 February 2005, as amended by Lei nº 14.112 of 24 December 2020, Arts. 41, 45 §§ 1 and 2, 56 §§ 4 to 6, 58 § 1 items I to III and § 2, 2020-12-24 official text · verified 2026-10-27

6. After confirmation, the judge may keep the debtor under court supervision until it performs plan obligations falling due within up to 2 years; any breach during that period converts the case into bankruptcy, and creditors' original rights and guarantees are restored less amounts paid.Lei nº 11.101 of 9 February 2005, as amended by Lei nº 14.112 of 24 December 2020, Art. 61 caput and §§ 1 and 2, 2020-12-24 official text · verified 2026-10-27

7. An out of court reorganization plan negotiated with creditors can be ratified by the court and binds all creditors of the classes covered if signed by holders of more than half of the claims in each class; it can be filed with one third support and a commitment to reach the majority within 90 days, and from filing the stay applies to the classes covered. Tax claims and fiduciary lien claims are excluded, and labor claims need collective bargaining. For voting, foreign currency claims are converted at the exchange rate of the day before the plan is signed, and the creditor's exchange rate protection can only be removed with its express approval.Lei nº 11.101 of 9 February 2005, as amended by Lei nº 14.112 of 24 December 2020, Arts. 161 § 1, 163 caput and §§ 3, 5, 7 and 8, 2020-12-24 official text · verified 2026-10-27

8. A creditor may petition for bankruptcy of a debtor that, without relevant legal reason, fails to pay on maturity liquid obligations in protested enforcement titles totalling more than 40 minimum wages (creditors may join to reach the threshold), that does not pay, deposit or offer assets when executed, or that commits listed acts such as hasty liquidation, simulated transfers or abandoning its establishment.
Example: In 2026 the threshold is more than R$64,840 of protested titles. / About US$12,155.Lei nº 11.101 of 9 February 2005, Art. 94 items I to III and §§ 1 and 3, 2005-02-09 official text · verified 2026-10-27

9. In bankruptcy, after post filing (extraconcursal) claims such as DIP financing, claims are paid in this order: labor claims up to 150 minimum wages per creditor and work accident claims; secured claims up to the value of the collateral; tax claims (except fines); unsecured claims, including the excess of labor and secured claims; contractual and tax fines; subordinated claims; and interest accrued after the bankruptcy.
Example: A former manager owed R$400,000 in labor claims ranks first for R$243,150 (150 minimum wages in 2026) and unsecured for the remaining R$156,850. / About US$45,580 preferred and US$29,402 unsecured.Lei nº 11.101 of 9 February 2005, as amended by Lei nº 14.112 of 24 December 2020, Arts. 83 items I to IX and 84 items I-A to V, 2020-12-24 official text · verified 2026-10-27

10. A chapter on cross border insolvency, added in 2020, lets the court recognize a foreign proceeding as main (opened where the debtor has its centre of main interests) or non main (where it has an establishment or assets), lets foreign representatives seek assistance and lets judges communicate directly with foreign courts without letters rogatory. Treaties prevail, the judge may refuse to apply the chapter only for manifest offence to public policy, and the STJ's power to homologate foreign judgments is preserved where applicable.Lei nº 11.101 of 9 February 2005, Chapter VI-A added by Lei nº 14.112 of 24 December 2020, Arts. 167-A §§ 3, 4 and 6; 167-B items I to III; 167-J § 1; 167-P § 1, 2020-12-24 official text · verified 2026-10-27 · changed: Lei nº 14.112 of 24 December 2020 added Chapter VI-A (arts. 167-A onwards) on cross border insolvency.

Event	Deadline	Article
Plan filed	60 days from publication of the processing decision	Art. 53
Creditor objections	30 days from publication of the creditor list	Art. 55
Creditors' meeting	Within 150 days of the grant of processing	Art. 56 § 1
Stay of enforcement	180 days, extendable once	Art. 6 § 4
Creditors' own plan	30 days after rejection or after the stay ends without a vote	Arts. 6 § 4-A and 56 § 4
Court supervision after confirmation	Obligations due within up to 2 years	Art. 61

Judicial reorganization timeline (Lei nº 11.101/2005).

Rank	Claim
1	Labor claims up to 150 minimum wages per creditor (R$243,150) and work accident claims
2	Secured claims up to the value of the collateral
3	Tax claims, excluding fines
4	Unsecured claims, including excess labor and secured amounts
5	Contractual fines and tax and administrative penalties
6	Subordinated claims, including non arm's length claims of partners and managers
7	Interest accrued after the bankruptcy decree

Order of payment in bankruptcy after extraconcursal claims (art. 83). 2026 values at R$1,621 minimum wage.

Worked example

A foreign bank lent US$10 million to a Brazilian manufacturer, half secured by a fiduciary lien on equipment and half unsecured. When the borrower files for judicial reorganization, the unsecured part is stayed for 180 days and votes in the unsecured class (Lei nº 11.101 arts. 6 and 41), while the fiduciary lien stays outside the plan, although the equipment cannot be removed during the stay if essential (art. 49 § 3). If the debtor's plan is rejected, the bank and other creditors holding more than 25 percent of claims can table their own plan, which may convert debt into equity (art. 56 §§ 4 to 7).

Step by step

1. Take fiduciary liens or leasing structures rather than plain pledges or mortgages where possible; they stay outside the reorganization plan (art. 49 § 3).
2. Monitor counterparties for protests and lawsuits; protested titles above 40 minimum wages support a bankruptcy petition (art. 94 I).
3. When a reorganization is filed, check your listing and value in the creditor list and file corrections or objections on time (arts. 7, 55).
4. Attend the creditors' meeting or send a proxy; classes and majorities are set by art. 45.
5. In foreign currency claims, insist on keeping exchange rate protection in any out of court plan (art. 163 § 5).
6. If the debtor is in insolvency proceedings abroad, use Chapter VI-A to seek recognition or cooperation in Brazil.

Common traps

Assuming a guarantee from the debtor's parent is stayed too: creditors keep their rights against guarantors and co obligors (art. 49 § 1).
Missing the 30 day objection window, which lets the plan be confirmed without a meeting (arts. 55 and 58).
Counting on more than one extension of the stay: the law allows a single extension, exceptionally (art. 6 § 4).
Treating all labor claims as preferred: only up to 150 minimum wages per creditor ranks first (art. 83 I).
Expecting an out of court plan to cover tax debt; tax claims are excluded (art. 161 § 1).

Sources

← Debt collection in Brazil: protest, executive proceedings, online bank freezes, payment orders and out of court foreclosureClaims against the state in Brazil: writs of mandamus, the 5 year limit, precatórios, small value requisitions and arbitration with the administration →