BRAZIL Trends and Developments Contributed by: Marcelo Lucidi, Henrique Forssell and Octaviano Duarte, Duarte Forssell Advogados
Co-operation between courts Upon recognition of a foreign proceeding, the Bra - zilian court shall co-operate to the maximum extent possible with foreign courts or foreign representatives. The Brazilian court is entitled to communicate directly with, or to request information or assistance directly from, foreign courts or foreign representatives. How are Brazilian courts reacting to the new legislation? Since the new legislation came into force, Brazilian courts have been receptive to the recognition of for - eign insolvency proceedings, although a few ques - tions remain. Freezing order over assets of Scottish debtor In a 2024 ruling, Judge Rapporteur Osmar Mohr from the State Court of Santa Catarina issued an order freezing all known assets of a Scottish individual who was subject to insolvency proceedings in Scot - land and was accused of dissipating and concealing assets worldwide. In the case, a liquidator appointed by a Scottish court applied for recognition of a sequestration proceeding in Brazil. Before the recognition in Brazil, this insol - vency proceeding had already been recognised in the United States, England and Switzerland. However, the recognition was initially rejected on the grounds that it would require prior homologation from the Superior Court of Justice. By reviewing the inter - locutory appeal filed by the liquidator, the State Court of Santa Catarina clarified that the underlying applica - tion did not require prior homologation, as expressly established in the legislation recently enacted, and therefore ordered that all real estate of the debtor in Brazil should be frozen, inasmuch as it was part of the insolvent estate. Coffee trader obtains Chapter 11 recognition in Brazil In 2023, a global coffee trader filed for Chapter 11 bankruptcy in New York on the grounds that market conditions such as supply disruptions and higher costs to raise financing throughout the pandemic jeopardised the company’s ability to pay its debt on time.
In 2024, the group secured recognition of its Chapter 11 bankruptcy in Brazil. The measure was meant to prevent creditors from enforcing their rights in Bra - zil, as the debtor declared over USD500 million in liabilities. With the recognition, the debtor obtained a moratorium suspending all execution proceedings in Brazil, as the group pursued its reorganisation in the United States. BVI liquidation recognised in Brazil A Brazilian court has also granted the recognition of a British Virgin Islands liquidation of an entity which has an operational subsidiary in Brazil. In this case, the Brazilian subsidiary is under judicial reorganisation and is in the process of implementing its reorganisa - tion plan. The application for recognition of the foreign parent company was filed before the same bankruptcy court. However, the Paraná State Court overturned the rec - ognition order issued by the bankruptcy court, on the grounds that, due to the particularities of the case, the Brazilian subsidiary should have been heard in advance of the order. Counsel to the British Virgin Islands liquidator argued that the Brazilian legislation does not require prior intervention from related parties prior to the granting of a recognition order. The matter was appealed to the Superior Court of Justice, which is expected to settle the argument. Foreign liquidation linked to major sovereign fund fraud seeks recognition in Brazil In 2026, the foreign representatives of an offshore company linked to a major sovereign fund fraud sought recognition in Brazil of a foreign insolvency proceeding connected to a large-scale international asset-tracing effort. The case forms part of broader attempts to recover assets allegedly diverted through complex cross-border transactions involving financial institutions and corporate structures in multiple juris - dictions. The recognition application was aimed at obtaining judicial assistance in Brazil in support of the foreign office-holders’ investigatory efforts. The foreign rep - resentatives were authorised to seek evidence, infor - mation and related relief in Brazil concerning assets, liabilities and potential claims connected to the for -
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