BRAZIL Law and Practice Contributed by: Thiago Fernandes Chebatt and Luiz Eugênio Araújo Müller Filho, Müller Chebatt Advogados
tion, and foreign investors must comply with onboard - ing, tax and FX procedures applicable to the product and to their status. As a practical matter, international allocations concentrate in platforms with mature governance, transparent valuation and reporting, and robust controls around receivables verification and servicing oversight. Investors also pay close atten - tion to the stability of the tax profile and to the ability of the structure to perform under stress, because the practical enforceability path in Brazil is a core part of risk assessment. 2.4 Compliance and Reporting Requirements Compliance and reporting depend on the structure. Fund-based private credit requires adherence to CVM governance and disclosure rules implemented by the manager and administrator, typically supported by risk management, conflicts and suitability policies and periodic investor reporting. Where receivables are central, the operational perimeter expands to include data governance, eligibility testing, auditing and clear allocation of responsibilities among manager, admin - istrator, custodian/controlling agent and servicer. In cross-border loans, tax and FX reporting discipline becomes critical, because defects can create friction precisely when the lender needs to accelerate, rene - gotiate or enforce. Across structures, market practice increasingly expects robust AML/KYC and sanctions representations and co-operation undertakings, even when not legally mandated for every participant. 2.5 Club Lending and Antitrust Club lending is common in Brazil for larger private credit tickets, but execution quality depends on credi - tor co-ordination and clean allocation of authority. Key issues are information sharing, voting thresholds, enforcement control, release mechanics and the role of a representative or security agent, because frag - mented decision-making can destroy value in dis - tress. The regulatory perimeter does not prohibit club structures, but weak intercreditor drafting can trans - late into delays, inconsistent positions and litigation over standing to enforce security. Competition law issues are not typically front-and-centre for clubs as such, but they can arise in exceptional cases where co-ordination affects a product market or where credit positions convert into control or asset acquisitions. Practical mitigants include disciplined information
protocols and intercreditor mechanics that produce decisive outcomes.
3. Structuring and Documentation 3.1 Common Structures Brazilian private credit is commonly structured through secured bilateral or club loans, corporate debt instru - ments such as debentures, and receivables-based strategies implemented through FIDCs or securitisa - tion products. Although the economic exposure may look like direct lending, the wrapper is often a regu - lated fund or a capital markets instrument because that aligns with the regulatory perimeter and distribu - tion practice. Revolving and delayed-draw features exist, but lenders generally require tight draw condi - tions, frequent reporting and cash-flow controls given macro volatility and enforcement realities. Structures are increasingly designed around a realistic downside path, which means emphasising verifiable collateral, controllable collections and early-warning triggers that allow intervention before value deteriorates. 3.2 Key Documentation A typical documentation package includes a main credit instrument and a Brazilian-law collateral suite tailored to the pledged assets, with registry sequenc - ing and perfection steps designed from the outset. Where the transaction is receivables-driven, docu - mentation expands to include eligibility criteria, con - centration limits, servicing standards, audit rights, performance triggers and waterfall mechanics that convert legal rights into operational controls. In club and multi-tranche deals, intercreditor arrangements are central to allocating enforcement authority, defin - ing standstills and governing releases and proceeds distribution. Structures such as first-out/last-out or layered tranches are feasible, but they only work in practice if economic priority is translated into enforce - able control rights and executable proceeds alloca - tion. Drafting therefore tends to be less “form-based” and more operational, reflecting Brazil’s registry and enforcement dynamics. 3.3 Restrictions on Foreign Direct Lenders Foreign lenders can participate through cross-border loans, acquisitions of Brazilian debt instruments or
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