Mediation Under Pressure

Brazil is going through what may be the busiest year for judicial reorganizations in its recorded history. According to the RGF-BizDoc Monitor, close to 8,000 companies were in judicial reorganization proceedings by mid-2026, a 21.2% increase over the previous year. The trend intensified in August, when Casas Bahia, one of the country's most recognized retail brands, filed for reorganization to restructure about R$17.3 billion in debt, and the group that owns Habib's, a large fast-food chain, joined the list a few days later. In the same week, a court in Rio declared the bankruptcy of Oi, a telecommunications company whose restructuring had been a benchmark case in the field for almost a decade. Different companies, very different stories, and a common backdrop: the Brazilian restructuring landscape has grown in size, complexity, and speed.

For international readers, a brief translation is useful. Brazil's judicial reorganization proceeding, created by Law No. 11,101 in 2005, is functionally similar to Chapter 11 in the United States. It allows a distressed company to suspend enforcement actions, renegotiate obligations with creditors under judicial supervision, and present a restructuring plan. Two decades in, the framework is mature but far from painless. Cases remain long and adversarial, and the record filings of 2025 and 2026 have put the system under a level of stress it had not faced before.

The most significant change of the past decade, however, did not come from the courts. It came from Congress. In 2020, Law No. 14,112 modernized the insolvency framework and, for the first time, formally embedded mediation and other consensual dispute resolution methods into reorganization proceedings. The reform reflected a growing conviction inside the Brazilian restructuring community: judicial reorganization is not, in essence, a two-party dispute. It involves creditors, investors, employees, regulators, and management, whose interests overlap and diverge in unpredictable ways. Confrontational litigation almost always destroys value along the way.

Mediation, by contrast, offers a structured environment in which those interests can be surfaced, tested, and negotiated with the support of a neutral. Since 2020, courts in Brazil have been encouraged to refer disputes within reorganizations to mediation, especially where collective negotiation and creditor alignment are on the table. Since then, the field has grown quickly, becoming one of the most dynamic areas of Brazilian dispute resolution practice.

Two experiences illustrate both the promise and the limits of that approach.

The first involves Construtora OR, a real estate and construction company. In 2021, under a Special Conflict Treatment Regime created by the Rio de Janeiro Court during the pandemic, NUPEMEC (the state judiciary's mediation unit) and FGV designed a dedicated mediation track for the company. The program consolidated 82 lawsuits and conducted around 150 online mediation sessions, supported by a specialized platform and a multidisciplinary team of mediators, case managers, and technology staff.

Participation rates were high, with lawyers and parties present in more than 86% of the sessions, and the cycle produced 31 court-approved settlements. Mediation reduced litigation pressure and helped the company renegotiate liabilities without triggering a broader insolvency spiral.

The second involves Oi Telecom. Its first judicial reorganization, filed in 2016, combined court-supervised restructuring with a large-scale mediation program aimed at tens of thousands of small-value creditors. The initial phase mobilized around 200 mediators, and by late 2020, an FGV consolidated report showed the program had reached approximately 77,000 creditors and 36,000 lawyers, run around 1,500 online mediations, and delivered more than 53,000 settlements. It was, by scale alone, one of the most ambitious mediation programs ever conducted in a Brazilian reorganization, and it set precedent for many that followed. The first proceeding closed in December 2022 with substantially reduced debt. In March 2023, however, Oi filed a second judicial reorganization, and in August 2026, a Rio court declared its bankruptcy.

Two lessons emerge from putting these cases side by side. The OR experience shows that mediation can genuinely reshape the texture of a reorganization, especially when embedded early and supported by real institutional infrastructure. The Oi experience shows that mediation can succeed at what mediation actually does, namely resolving disputes and aligning creditor expectations, without being able, on its own, to reverse market conditions or financial pressures that fall outside the negotiation table. This distinction is important, and it becomes more important as more jurisdictions consider incorporating consensual mechanisms into their own insolvency systems.

For an international audience watching the Brazilian experiment, three observations seem worth emphasizing. First, embedding mediation formally in the legislative framework was decisive. Without the 2020 reform, most of what has happened since would have depended on the goodwill of individual courts. Second, the quality of institutional support around mediation, from specialized centers to platforms, protocols, and trained mediators, is what turns an abstract possibility into a workable practice. Third, mediation is a companion to judicial oversight, not a replacement for it. When a company is beyond repair, mediation cannot rescue it. What it can do is reduce collateral damage, preserve dialogue with creditors, and help close the process with more information and less bitterness than pure adjudication would allow.

Two decades after the enactment of its restructuring framework, Brazil is going through both a stress test and a maturation moment. The record filings of 2025 and 2026 tell us that a growing number of companies need somewhere to turn. The 2020 reform tells us that the legal system has already recognized mediation as one of those places.Cases like OR and Oi, taken together, remind us that mediation is a strategic instrument, not a magic one. Used well, and used early, it can protect what is worth protecting: jobs, relationships, and the possibility of a restructured future.