A wave of court-supervised debt restructurings, a process akin to Chapter 11 and long the domain of big corporate groups, has reached Brazil's smallest businesses. Micro and small companies under judicial protection to renegotiate debts totaled 2,821 in June, up 41.4% from June 2025, according to the Monitor RGF-BizDoc survey reported by O Globo. That is nearly double the pace of the corporate sector as a whole: among medium and large firms, the stock of cases rose 21.2% over the period.
Most of the filings come from retail. In the first half of the year, restructurings rose 18.3% among microenterprises and 11.2% among small businesses, against an overall rate of 8%. The backdrop is shared across company sizes: a long stretch of high interest rates has made credit expensive and drained cash, while household debt hit a record 82%, curbing consumption, according to data cited by the newspaper.
Costly credit, thin collateral
Two weaknesses set small firms apart, said Claudio Damasceno, a partner at RGF Associados and BizDoc. Management tends to be family-run and thinly professionalized, which delays decisions in a crisis, and there is little property to pledge to creditors. "Small companies carry a big emotional component: the father's business hires the son and is friends with the supplier. And there is a lack of crisis expertise. That makes decisions harder," he said. In farming, even small producers can offer machinery or part of their land; retail, which runs on working capital and inventory, rarely has assets. Because of that, Damasceno warned, restructurings are more likely to end in bankruptcy for small companies, and the ideal is to renegotiate before going to court.
Credit remains costly. Pronampe, a credit line created in 2020 to rescue small businesses during the pandemic and backed by a government guarantee fund (FGO), charged the Selic benchmark rate, then about 2% a year, plus 1.25% at launch. It now charges Selic, at 14%, plus 6%. Under the Novo Desenrola program, in force from May to August, monthly lending jumped from 2 billion to 3 billion reais to more than 9 billion reais, and delinquency in the program fell from 9.9% to 7.5% between May and July. A UBS BB report cited by the newspaper expects the rate to climb again as the old rules return. In the first half, state development bank BNDES lent a record 108.2 billion reais to micro, small and medium-sized companies. For Rodrigo Soares, head of the small-business agency Sebrae, credit must come "accompanied by financial education and a long-term view": the Desenrola Empresas program is an emergency measure, and survival depends on what the owner does with the breathing room.
The visible tip of the zombie firms
The formal filings are the last stage of a broader problem. Brazil recorded nearly 1,000 restructuring requests in the 12 months through April, according to credit bureau Serasa Experian. A study by Caio Szumanski, an economist at the Getulio Vargas Foundation (FGV), using quarterly data on 375 companies listed on the B3 exchange from 2010 to 2024, shows that many firms live with chronic fragility long before they reach the courts: so-called zombie firms, whose operations barely cover their interest payments, account for 74.5% of the textiles, clothing and footwear sector and 65.8% of retail. At that stage, investment falls by about 25% and financial expenses rise 30%, the researcher told InvestNews, and one zombie firm raises the odds that others appear in the same sector, making credit more expensive for everyone.
For small-business owners, the margin to negotiate is thin: without a strong brand or collateral, restructuring plans stay fragile and, in a crisis, "the partner has to put up his own car as collateral," said Fabio Bentes, chief economist of the National Confederation of Commerce (CNC). For consumers, the effect arrives as a leaner retail sector: sales grew 1.6% through June, and Bentes sees a sector chronically unable to grow more than 2% a year, as households spend more on services and less on goods, a shift he expects to accelerate with the end of the low-value import levy known as the "blusinhas" tax.