Brazilian petrochemical manufacturer Braskem has received judicial approval in Sao Paulo to proceed with an extrajudicial debt restructuring covering 10.9 billion dollars in liabilities, the company announced on Friday.
The decision by the 2nd Bankruptcy and Judicial Recovery Court of the Judicial District of Sao Paulo ratifies a 120-day suspension of all active execution proceedings against Braskem and certain subsidiaries by creditors subject to the reorganization plan.
Braskem disclosed the judicial approval through an official material fact filing on August 28, 2026. The company noted that the 120-day timeframe accounts for the deduction of 60 days previously granted under a preliminary injunction ruling.
Scope of legal protection
The stay ordered by the court halts the statute of limitations for obligations owed by the debtor companies. It also suspends all lawsuits, debt execution proceedings, and any other legal actions related to the affected claims, including pending bankruptcy petitions.
Furthermore, the ruling suspends all judicial and extrajudicial orders concerning asset retention, arrest, attachment, seizure, search and seizure, or any other form of property constriction targeted at company assets.
Braskem originally filed its petition for extrajudicial recovery earlier in the week. The petrochemical group emphasized that the court process is strictly financial in scope and does not involve suppliers, trade partners, or other commercial stakeholders.
Debt capitalization and shareholder support
Looking ahead to the final restructuring agreement, Braskem stated that it is possible the definitive plan will include converting a portion of its outstanding debt into equity capitalization.
The company also stated that the plan includes provisions for potential liquidity support from its principal shareholders, private equity firm IG4 and state-backed energy group Petrobras, should additional liquidity become necessary during the process.
Extrajudicial recovery is an out of court reorganization mechanism under Brazilian bankruptcy law that allows a company to negotiate binding debt adjustments with financial creditors while receiving temporary court protection against asset seizures. Braskem operates as Latin America's largest producer of thermoplastic resins, while Petroleo Brasileiro SA, known as Petrobras, is Brazil's state-controlled oil company and a key investor in the firm.
