In mid‑August 2026, Grupo Casas Bahia filed for judicial recovery to restructure R$ 17.3 billion in debt, days after announcing a second‑quarter net loss. Weekend filings by Marabraz followed the same path, revealing a widening crisis in Brazil’s retail sector.
What is judicial recovery?
Judicial recovery (recuperação judicial) is a court‑supervised process that allows indebted companies to renegotiate debts and continue operating. In Brazil, the procedure is overseen by state courts and governed by the 2020 Bankruptcy Law, which aims to give viable businesses a chance to reorganize rather than liquidate.
Why retailers are vulnerable
Retailers such as Casas Bahia rely heavily on physical stores, large inventories, thin margins and consumer credit. High interest rates—Brazil’s Selic rate stood at 13.75% in August 2026—and softer demand have squeezed cash flows. Many firms also use “risco sacado”, a mechanism that advances receivables from suppliers to finance working capital, which can mask deeper reliance on borrowing.
The trend spreads beyond retail
Data from Serasa Experian show that retail accounted for 21.7% of companies in judicial recovery in 2025, but the procedure is no longer limited to scandals like Odebrecht or Americanas. Agronomy, construction and services now represent large shares of filings.
- Agribusiness – With 30.1% of judicial‑recovery cases in 2025, the sector leads the statistics, up from 1.3% in 2012. Analysts cite inadequate risk provisioning, exposure to dollar‑denominated inputs and commodity price volatility.
- Construction – The sector faces a steep rise in borrowing costs after projects launched when the Selic was near 2%. Labor shortages have worsened delays; the CBIC reports an 8.82% yearly rise in labor costs versus 4.14% official inflation.
- Services – Representing 30% of recovery filings, the services PMI slipped below 50 in July 2026, signalling contraction as clients delay payments and demand wanes.
A broader credit‑stress environment
Serasa Experian recorded 977 judicial‑recovery filings in 2025, the highest since 2016, involving 2,466 CNPJs—a 13% increase from 2024. Yet success rates are falling: Monitor RGF estimates that about two in five companies that complete recovery later go bankrupt, compared with one in ten a year earlier.
Experts note that small businesses often bypass the process altogether, simply closing when credit dries up. Judicial recovery tends to aid larger firms that can negotiate with creditors, leaving many micro‑enterprises without a formal restructuring path.
Legal changes and macro‑economic drivers
The 2020 Bankruptcy Law made recovery filings easier by lowering the quorum for approving out‑of‑court plans and extending protection periods. Prior to that, extrajudicial recoveries averaged only 3.5 cases per year (2006‑2019); 2025 saw 84 such petitions.
Analysts also point to the end of the cheap‑money era. Many companies that borrowed abroad at low rates during the pandemic now face maturing debt amid higher global rates, creating a “debt wall” of compounding interest.
While the banking system remains dynamic, credit spreads remain wide. Pantalica Partners estimates that the spread over the CDI can reach five percentage points, pushing effective annual rates to 19% or more—well above the Selic.
The pattern suggests a systemic stress in Brazil’s credit cycle, where sector‑specific weaknesses (retail’s reliance on stores, agribusiness’s commodity exposure, construction’s labor‑cost pressures, services’ payment delays) intersect with high borrowing costs and subdued consumer spending.