The recent approval of Azul Linhas Aéreas' restructuring plan by the New York bankruptcy court on December 12, 2025, represents a significant milestone not only for the company but for the entire Brazilian aviation sector. The case highlights the complex interaction between the laws of different countries and the importance of efficient restructuring mechanisms for companies operating in a globalized and capital-intensive market, such as aviation.
Azul's Restructuring Plan
The approved plan, which had the support of more than 901 creditors, is a comprehensive restructuring architecture that goes beyond a simple debt renegotiation. It includes the conversion of part of the debt into equity, the renegotiation of aircraft leasing contracts, and the injection of new capital, allowing the company to emerge from the process leaner and with a more sustainable capital structure.
The main points of the plan can be summarized in the table below:
| Component | Details |
| Debt Reduction | Net debt will be reduced from approximately US$ 7 billion to US$ 3.7 billion. |
| Aircraft Leasing | Reduction of 28% in leasing obligations, with a significant agreement with AerCap, one of the world's largest aircraft leasing companies. |
| New Investments | Raising up to US$950 million, including strategic investments from United Airlines and American Airlines. |
| Lever | The company's financial leverage, measured by the ratio of net debt to EBITDA, should fall to 2.5 times, a level considered healthy for the sector. |
The Challenge of Judicial Reorganization in Brazil for Airlines
The Azul case sheds light on a significant legal obstacle to the judicial reorganization of airlines in Brazil. The Bankruptcy and Judicial Reorganization Law (Law No. 11.101/2005) has a particularity that drastically reduces its effectiveness for companies in the airline sector: the exclusion of aircraft leasing contracts from the effects of the reorganization.
Article 199 of the law, amended in 2005, establishes that the rights of aircraft lessors are preserved, meaning they are not subject to the 180-day suspension (the so-called...). stay periodThis suspends legal actions and executions against the company undergoing judicial reorganization. In practice, this means that a creditor under a leasing contract can request the repossession of the aircraft at any time, even if the company is in judicial reorganization proceedings.
Since most airlines' fleets consist of leased aircraft, this legal exception makes judicial reorganization in Brazil a rather ineffective instrument for the sector, as it does not protect the most essential asset for the continuity of the company's operations.
The Alternative of Chapter 11 and International Cooperation
Given the limitations of Brazilian legislation, Azul, like other Latin American airlines (such as LATAM and Gol), opted to seek protection from... Chapter 11 of United States bankruptcy law. The Chapter 11 It is a more flexible and comprehensive mechanism that offers a number of advantages over Brazilian judicial reorganization, especially for companies with international operations and debts.
The following table compares the two regimes:
| Feature | Judicial Reorganization (Brazil) | Chapter 11 (USA) |
| Aircraft Leasing | Excluded from protection | Included in the protection |
| Financing (DIP) | Less developed and slower | Mature and agile market |
| Legal Security | Greater variability in decisions | More predictable process |
| International Creditors | Less familiar | Widely known and accepted |
The Relevance of Judicial Reorganization in the National Scenario
It is crucial to emphasize, however, that Azul's choice for Chapter 11, Motivated by legal certainty and the particularities of its operation, this does not diminish the importance of the Judicial Reorganization process in Brazil. For the vast majority of Brazilian companies in difficulty, Law No. 11.101/2005 remains the main and most appropriate instrument for overcoming financial crises.
The national procedure was designed for the reality of the Brazilian economy and offers a structured path for companies in various sectors to renegotiate their debts, preserve their activities, maintain jobs and, ultimately, guarantee their social function. Brazilian judicial reorganization, despite its challenges, has been fundamental to the survival and reorganization of numerous companies, protecting creditors and the economy as a whole. The choice of a transnational process like this... Chapter 11 It is a strategic exception, applicable to a specific type of company, and not the rule.
The Azul case demonstrates that, in sectors with internationalized debt and intensive use of leased assets, the issue is not... if The company will restructure, but where and with which legal tools This will be done more efficiently. The choice for Chapter 11 This highlights the limitations of Brazilian legislation in dealing with the complexity of airline operations, but does not invalidate judicial reorganization as an essential tool for the Brazilian business landscape.
Azul's successful restructuring, combining the protection of Chapter 11 With the cooperation of the Brazilian justice system, this serves as an important precedent and a reminder of the importance of having alternatives and improving business recovery mechanisms, which are essential for the health of the economy and the maintenance of jobs.