Brazilian companies have been employing extrajudicial recovery as a strategy to reorganize their finances and stave off bankruptcy, a trend highlighted by recent actions from the GPA (Grupo Pão de Açúcar) and Raízen. According to the Obre (Brazilian Observational Network for Extrajudicial Recovery), there were 78 extrajudicial recovery cases last year, marking the highest number since records began in 2006 and a 20% increase over 2024. This mechanism, improved by reforms to the Bankruptcy Law in 2020, offers companies a more agile and flexible approach to renegotiating debts compared to judicial recovery.

One significant distinction between extrajudicial and judicial recovery is the negotiation process. Extrajudicial recovery allows companies to directly negotiate their debts with specified groups of creditors, without judicial supervision. In contrast, judicial recovery requires a court's involvement and prioritizes labor debts and those incurred after filing for recovery. This flexibility in extrajudicial recovery can be a crucial factor for companies looking to avoid the complexities and potential delays associated with judicial processes.

As companies like GPA and Raízen utilize this method, the growing acceptance and adoption of extrajudicial recovery may signal a shift in how Brazilian businesses approach financial restructuring. With the increase in cases, it is essential for stakeholders, including creditors and policymakers, to observe the efficacy of this tool in enhancing corporate resilience and addressing financial challenges without the traditional legal constraints.