What are the primary methods of corporate restructuring adopted by Brazilian companies undergoing judicial recovery?

Abstract

We investigate the principal means of restructuring adopted by Brazilian companies in judicial recovery, according to Article 50 of Bankruptcy Law 11,101/05. Using a sample of 622 corporate reorganization plans from 2006 to 2018 for descriptive analysis, tests of differences between means and proportions, and logistic regression, we show that asset sales are companies' primary means of reorganization. Debt renewal, mergers, and acquisitions are also widely used. We confirm a positive relationship between level of debt and methods of restructuring that inject new resources into the company, such as mergers, capital increases, asset sales, and the issue of securities.