By Vitor Ferrari*
We closed the year with a milestone that departs from the traditional positive outlook: this time, the focus is on the increase in requests for judicial reorganization.
Among the most high-profile cases are companies such as Bombril, Azul, and Ambipar, among others, in addition to ongoing lawsuits involving Americanas, Oi, and Light.
But what lessons can be learned from these episodes that have garnered the spotlight?
The proving ground of governance under pressure.
The answer may lie in understanding that such cases are not limited to financial headlines: they function as true proving grounds for corporate governance, shaped and tested under intense crisis pressure.
With restructuring plans involving billions of reais and directly impacting the capital market and the banking sector, these processes become a watershed moment.
They demonstrate that the survival of companies in crisis depends fundamentally on serious, technical, and responsible management, and not just on the legal protection provided by legislation.
The low success rate and the risk of failure.
Despite this surge in requests, the actual success rate in the country is worryingly low.
According to exclusive data from Monitor RGF, a consulting firm under the RGF umbrella, nearly 401,300 of the companies that concluded their judicial reorganization process in the third quarter of this year ended up bankrupt.
Major trials teach us that financial crises are, more often than not, the result of a governance crisis.
The low utilization of available corporate governance mechanisms has been identified as one of the causes of the low success rate of judicial reorganizations in the country, generating conflicts of interest that compromise the viability of the judicial reorganization plan.
Rebuilding credibility with ESG.
Nowadays, restructuring isn't just about cutting costs or extending debt, but about rebuilding the company's credibility.
This requires tax compliance, rigorous internal controls, accounting clarity, and even the incorporation of ESG (Environmental, Social, and Governance) indicators.
A lack of good governance is a key factor in business failure and setbacks.
The impact of the LRF reform (Law No. 14.112/2020)
Law No. 14,112, enacted in 2020, which amended the Corporate Reorganization and Bankruptcy Law (LRF), was created precisely to try to address some of these governance deficiencies and increase the chances of successful restructurings.
The reform introduced fundamental provisions, such as:
- DIP Financing (Debt Held by the Debtor): brought greater legal certainty to DIP Financing, a type of loan granted to companies in receivership.
- Mediation and Conciliation: the reform encouraged the use of pre-trial and trial mediation and conciliation mechanisms to expedite the process and reduce litigation.
- New Consolidation Figures: the introduction of substantive and procedural consolidation rules allows for the joint handling of cases involving economic groups.
The imperative of corporate proactivity
The lesson from the giants in recovery is an imperative of proactivity and compliance for the target audience (businesspeople, funds, advisors, and the judiciary).
To prevent financial crises and even fraud, companies can adopt simple yet effective corporate governance practices:
- Active board of directors: to oversee strategic decisions and monitor risks.
- Robust internal controls: ensuring that financial and operational processes are auditable and transparent.
- Tax and regulatory compliance: avoiding fines, hidden liabilities, and legal problems.
Therefore, to avoid insolvency, it is essential that companies adopt: strengthened corporate governance, efficient financial management, and contingency plans.
Judicial reorganization should be seen as a last resort, and its success invariably depends on an institutional reconstruction that begins at the top of governance.
*Vitor Ferrari is a lawyer specializing in Judicial Reorganization and a partner at the law firm Mazzucco & Mello Advogados.
Source: EXAM.