What Is a Judicial Reorganisation Plan & How to Prepare One in Brazil

Introductory note: A judicial reorganization plan is the legal instrument through which a distressed company presents its restructuring proposal to the court and its creditors. It sets out how the company intends to reorganize and settle its debts, preserve operations, and avoid bankruptcy under Brazilian law.

Introduction

Every business activity involves risk. Even well-established companies may face financial pressure, whether due to internal management failures or external events such as market shifts, increased competition, rising costs, declining demand, changes in consumer behavior, or any number of other factors.

When these pressures intensify, indebtedness often follows. In some cases, debt ceases to be merely a financial challenge and begins to threaten the continuity of the business itself. It is in this context that judicial reorganization becomes a relevant legal remedy in Brazil. It creates a court-supervised framework for reorganizing liabilities, staying collection efforts, and giving the company time and predictability to renegotiate obligations and restore operational balance.

Brazilian law provides for this mechanism because preserving a company is not only in the interest of its shareholders. A business in operation generates jobs, supports the economy, pays taxes, maintains contractual relationships, and performs a broader social function. For this reason, Article 47 of Law No. 11,101/2005 treats the preservation of business activity as a value worthy of protection, provided there is a real prospect of recovery.

How judicial reorganization works in Brazil

Who may file for judicial reorganization

Judicial reorganization is not available to every financially distressed company. Brazilian law establishes objective eligibility requirements, which must be reviewed at the outset. This makes the eligibility analysis the first legal filter in determining whether a particular case is suitable for judicial reorganization.

In summary, Article 48 of Law No. 11,101/2005 provides that a debtor may apply for judicial reorganization if it:

• has been regularly carrying on business activities for more than 2 years;

• is not bankrupt, or, if it has previously been bankrupt, has already obtained a final decision extinguishing the related liabilities;

• has not obtained judicial reorganization within the previous 5 years; and

• has not been convicted of crimes set forth in the law, nor has a manager or controlling shareholder in that condition.

In practical terms, this shows that judicial reorganization was designed for companies in crisis that still retain a minimum degree of regularity and credibility. The law also permits, in specific circumstances, that the filing be made by persons connected to the debtor, such as a surviving spouse, heirs, the estate administrator, or the remaining partner.

What are the stages of a judicial reorganization plan

Once eligibility is established, the next step is to understand how the judicial reorganization plan enters the process and when it becomes decisive. Although many people associate reorganization solely with debt renegotiation, the process actually begins earlier, with preparation, diagnosis, and the organization of strategic information.

1. Diagnosis of the crisis and organization of documents

The first stage begins before the court filing. The company must identify, with clarity, the causes of the crisis and organize the documentation that will support the request.

This typically includes financial statements, a full list of creditors, tax liabilities, pending litigation, employee information, bank statements, and a list of assets and rights. Without this diagnostic stage, the judicial reorganization plan is weakened before it is even submitted.

2. Filing the judicial reorganization request

Once the documentation is assembled, the company files the request before the court. At this stage, it is not enough simply to allege financial distress. The debtor must explain the concrete causes of the crisis and demonstrate, through supporting documents, that the filing is regular and properly grounded.

In some cases, the judge may order a preliminary verification to confirm that the company is effectively operating and that the documentation submitted is complete. This functions as an initial filter for the seriousness and legitimacy of the filing.

3. Court authorization of the proceeding

If the documentation is in order, the judge authorizes the processing of the judicial reorganization. From that point onward, the proceeding formally moves forward, including the appointment of a judicial administrator, the stay of actions and enforcement proceedings subject to the reorganization, and publication of notice to creditors.

This is a critical milestone because it creates a more stable environment in which the company may structure its restructuring proposal. The crisis is not yet resolved, but the legal space to negotiate and present the judicial reorganization plan has now been formally established.

4. Submission of the judicial reorganization plan

After the court authorizes the processing of the case, the debtor has a non-extendable period of 60 days to submit the judicial reorganization plan. This document must set out the proposed restructuring measures, demonstrate economic feasibility, and include an appraisal report concerning the debtor’s assets.

At this point, the plan ceases to be a mere intention and becomes a concrete restructuring proposal. In practical terms, the company must show how it intends to adjust its liabilities and preserve business continuity.

5. Publication of the plan and period for objections

Once submitted, the judicial reorganization plan is disclosed to creditors, who then have the statutory period to raise objections. This phase reveals the degree of market acceptance and identifies the aspects of the proposal most likely to face resistance.

For the company, this is a strategic moment. A judicial reorganization plan may be legally admissible and technically structured, yet still face strong opposition if it is not sufficiently aligned with the economic reality of the business.

6. Negotiation and voting by creditors

If any objection is filed, the plan will be submitted to the general meeting of creditors. At that stage, the proposal may be debated, amended, and voted on in accordance with the legal quorum rules.

Brazilian law also allows, in certain circumstances, approval of the plan through prior adhesion of creditors, without the need for a formal meeting. In either case, this is the phase in which the judicial reorganization plan is truly tested from both a commercial and financial perspective.

7. Court confirmation of judicial reorganization

If the plan is approved in accordance with the law, or if the legal requirements for judicial confirmation are otherwise met, the court grants the judicial reorganization. From that moment onward, the plan becomes binding on the debtor and on the creditors subject to the proceeding.

In practice, this is when the proposal stops being merely discussed and begins to operate as the governing framework for the restructuring of the company’s liabilities.

8. Compliance with the plan and judicial supervision

After confirmation, the company remains under judicial reorganization and must comply with the obligations set out in the plan, while also providing periodic information to the court. During this period, it continues to operate, but under supervision.

This point is essential because judicial reorganization does not end with court approval of the plan. The success of the judicial reorganization plan depends on the company’s actual capacity to implement the proposed measures.

9. Closure of the judicial reorganization proceeding

Once the obligations maturing within the legal supervision period have been fulfilled, the court closes the judicial reorganization proceeding by judgment. At that stage, the supervision measures are terminated and this phase of the process is formally concluded.

Closure marks the end of the court-supervised restructuring, but the real result will be measured by the company’s ability to maintain stability and continue operating sustainably.

Main changes introduced by Law No. 14,112/2020

Law No. 14,112/2020 significantly modernized judicial reorganization in Brazil and made the procedure more structured and more negotiation-oriented. Among the most important changes are the possibility of a preliminary verification of the company’s actual operating condition and documentation, as well as the expansion of the information that must accompany the initial filing.

The reform also brought greater flexibility to the design of restructuring solutions. In certain situations, the judicial reorganization plan may now be approved through creditor adhesion without a formal creditors’ meeting, and creditors may also submit an alternative plan if the debtor’s proposal is rejected.

In addition, the law strengthened restructuring tools such as debt-to-equity conversion, full sale of the company, and greater legal certainty in asset sales. In summary, the reform sought to make judicial reorganization in Brazil less rigid and more functional, bringing it closer to a true business reorganization framework.

What is the deadline for filing the judicial reorganization plan

Once the court authorizes the processing of the judicial reorganization, the debtor has a non-extendable period of 60 days to submit the judicial reorganization plan. This deadline starts from the publication of the decision authorizing the processing of the case, not from the filing date and not from the mere issuance of the decision.

If the plan is not submitted within that period, the legal consequence is severe: the judicial reorganization may be converted into bankruptcy. For this reason, the preparation of the judicial reorganization plan should begin even before the court’s authorization is published.

In practical terms, the authorization of the proceeding does not merely mark the formal beginning of the case. It also starts the countdown for the company to gather data, define measures, and align its negotiation strategy with creditors.

What are the legal requirements for preparing a judicial reorganization plan

Brazilian law imposes minimum legal requirements for the preparation of a judicial reorganization plan. First, the plan must contain a detailed description of the measures the company intends to adopt to overcome the crisis. It is not enough to state that restructuring will occur; the debtor must clearly identify which solutions will be implemented.

Second, the plan must include a demonstration of economic feasibility. In other words, the debtor must show that the proposal makes financial sense and that there is a real prospect of performance. In addition, the law requires an economic-financial report and an appraisal of the debtor’s assets, signed by a duly qualified professional or specialized firm.

Another crucial aspect concerns labor claims. As a general rule, the judicial reorganization plan may not provide for a period longer than 1 year to pay labor-related claims and claims arising from workplace accidents that were already due by the filing date. It must also observe the maximum term of 30 days for payment, up to the limit of 5 minimum wages per employee, of strictly salary-related claims that became due within the 3 months preceding the filing.

The law allows the labor-related payment term to be extended to up to 2 years, but only in exceptional circumstances. In such cases, there must be guarantees deemed sufficient by the court, approval by labor creditors, and assurance of full payment of those claims.

In practice, this means that a sound judicial reorganization plan must rest on three pillars: clear restructuring measures, economic feasibility, and compliance with statutory limits. Without these elements, the likelihood of creditor objection increases and the proposal becomes more vulnerable.

Consequences of breaching the judicial reorganization plan

Failure to comply with the judicial reorganization plan may lead to the conversion of the reorganization into bankruptcy during the court supervision period. In such a scenario, the company loses the protection of judicial reorganization and becomes subject to the bankruptcy regime, with all the consequences this entails for operations and governance.

However, that is not the only consequence. If bankruptcy is declared, creditors regain their rights and guarantees under the original contractual terms, subject to deduction of any amounts already paid and preservation of acts validly performed during the reorganization.

Moreover, after the court supervision period, failure to perform an obligation set forth in the plan may also allow a creditor to seek specific enforcement of that obligation or even request bankruptcy under the law. For management, the lesson is clear: having the plan approved is only part of the process; the decisive factor is the company’s ability to comply with it consistently.

Conclusion

A judicial reorganization plan should not be viewed merely as a formal requirement of the proceeding. It is the core document of the company’s restructuring strategy, because it defines how liabilities will be reorganized, which measures will be adopted, and how the business may be preserved.

For business leaders, understanding the logic of a judicial reorganization plan is essential. It is not simply a matter of knowing deadlines and procedural requirements. It is about recognizing that successful reorganization requires preparation, reliable information, economic coherence, and real execution capacity.

In a distressed scenario, the difference between merely gaining time and building an effective recovery often lies in the quality of the plan presented to the court and creditors. More than complying with the law, preparing a strong judicial reorganization plan means structuring a viable path for business continuity.

If your company is facing financial distress in Brazil, or if you are a foreign investor, shareholder, creditor, or business partner involved with a Brazilian company undergoing financial pressure, specialized legal advice at an early stage is often decisive. At BOTTI MENDES Advogados, we assist companies and business owners in navigating judicial reorganization, corporate restructuring, and strategic asset protection with a practical, business-oriented, and technically rigorous approach.

References

BRAZIL. Law No. 11,101, of February 9, 2005. Governs judicial reorganization, extrajudicial reorganization, and bankruptcy of businesspersons and business companies. Planalto. Available at: https://www.planalto.gov.br/ccivil_03/_ato2004-2006/2005/lei/l11101.htm. Accessed on: March 17, 2026.

BRAZIL. Law No. 14,112, of December 24, 2020. Amends Laws No. 11,101 of February 9, 2005, No. 10,522 of July 19, 2002, and No. 8,929 of August 22, 1994, in order to update the legislation regarding judicial reorganization, extrajudicial reorganization, and bankruptcy of businesspersons and business companies. Planalto. Available at: https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2020/lei/l14112.htm. Accessed on: March 17, 2026.