At the 3rd Brazilian Cerealist Congress, we helped broaden the discussion on the alternatives available to creditors in light of the growing use of judicial reorganization in agribusiness. The presentation delivered by Thomas Dulac Müller, managing partner at CPDMA, highlighted the main points of attention for cereal traders and other stakeholders in the chain, focusing on collective organization, strategic participation in creditors’ meetings, and the opportunities created by the alternative creditors’ plan.

By examining practical aspects of the legislation and voting dynamics, the content aims to provide a clear and functional overview of how to safeguard positions, mitigate risks, and structure more efficient solutions in restructuring scenarios

Below, we provide the full text presented at the event, including all details, explanations, and practical references.​

In today’s agribusiness sector, the judicial reorganization of rural producers is no longer an exception and has become a recurring scenario. For the cereal trader as a creditor, this entails, in practice, two main consequences. First, a significant portion of its receivables may become subject to the judicial reorganization, with a stay of enforcement proceedings, extended payment terms, haircuts, and uncertainty regarding cash flow. Second, from the moment the court grants the processing of the case, the logic ceases to be “every man for himself” and becomes a collective process, governed by law and decided in a creditors’ meeting.

It is precisely in this context that the alternative creditors’ plan comes into play. This mechanism allows organized creditors, such as a block of cereal traders, to reject draconian plans and put forward their own solution, including the takeover of assets and a much shorter exit horizon.

The purpose here is to explain, step by step, how this works in practice.​

1. What happens when the debtor files for judicial reorganization and where the cereal trader’s claim fits into this context​

When the judge grants the processing of the judicial reorganization, three main effects provided for in Law 11,101/2005, particularly in articles 6 and 49, generally come into force:

i. there is a stay of individual lawsuits and enforcement actions against the debtor for 180 days.

ii. he conditions of the claims subject to the reorganization are frozen, based on a statutory temporal cut-off date defined by law; and

iii. the dispute is no longer addressed through scattered enforcement proceedings and instead is resolved under a collective framework, by means of a plan and a creditors’ meeting

For the cereal trader, these effects unfold as follows: when the claim is concursal (for example, backed by an invoice, supply agreement, mercantile current account, etc.), it is included in the judicial reorganization and becomes dependent on the approved plan. In turn, in the case of extraconcursal claims, as expressly provided for in the legislation, there is the possibility of remaining outside the reorganization, with separate enforcement.

This is the case, for example, of certain structured transactions backed by a physical Rural Product Note (CPR) linked to barter arrangements, in which the CPR Law (Law 8,929/1994, article 11, as amended by Law 14,112/2020) now provides that the related claims and collateral are not subject to the effects of judicial reorganization and are treated under a separate regime.

In practice, many cereal traders hold mixed portfolios. Part of their exposure is protected by more robust structures and collateral, while another portion becomes trapped within the judicial reorganization. It is precisely with respect to this portion subject to reorganization that the alternative creditors’ plan becomes a tool for strategic protection.

2. From passivity to strategy: the creditor’s role after the judicial reorganization has been processed​

Once the reorganization has been processed, it is not enough to complain about the plan in the court corridors. As a rule, the debtor will present a plan with significant extensions of maturities, substantial haircuts, grace periods, and a payment horizon that may reach 10, 15, or even 20 years. The real path to protection requires three steps: first, identifying which creditor class the cereal trader falls into, which in most cases will be Class II, III, or IV. Second, coordinating with other creditors in the same class, especially other cereal traders, cooperatives, input suppliers, and regional financial institutions. Third, acting in a coordinated manner at the General Meeting of Creditors.

It is at the General Meeting of Creditors that it is decided whether the debtor’s plan will be approved, rejected, or amended, and also whether there will be sufficient political and legal room to pave the way for the creditors’ alternative plan. Without organization, each cereal trader acts as an isolated vote, easily diluted in a process steered by the debtor and major financial players. With organization, the group becomes a significant voting bloc in the meeting, able to influence the outcome of the vote and the very dynamics of the negotiation.

3. What, from a legal standpoint, is the creditors’ alternative plan​

The possibility for creditors to submit an alternative plan was introduced by Law 14,112/2020, which amended Law 11,101/2005 and regulated this mechanism in provisions such as article 56. In simplified terms, the reform opened two windows in which creditors can take the lead in structuring a solution. The first window arises when the debtor’s plan is rejected by the creditors’ meeting. In this scenario, instead of the case proceeding directly to bankruptcy, the General Meeting of Creditors itself may resolve to grant a 30‑day period for creditors to submit an alternative plan. The second window appears when the debtor’s plan is not deliberated within the statutory timeframe. If the stay period for enforcement actions expires without the plan having been voted on, the law again allows creditors the opportunity to present their own plan, provided that the legal requirements are met.

In addition, the legislation requires a minimum level of support for this alternative plan to be submitted to a vote. Broadly speaking, such support may be evidenced by the expression of consent from creditors representing more than 25% of the total claims subject to judicial reorganization or more than 35% of the claims held by creditors present at the meeting in which the alternative plan is discussed. This demonstrates that an alternative plan is not a speculative endeavor. It demands a group of creditors with substantial voting power in terms of claim value and sufficient coordination to draft, formalize, and advocate for the proposal within tight deadlines.

he law itself provides that the plan submitted by creditors may include capitalization of claims, with the conversion of debt into equity interests, changes in the control of the debtor company, and the organization of asset or production unit sales, pursuant to article 56 of Law 11,101/2005. Building on this framework, it is possible to structure the removal of the current management, the appointment of new managers designated by the creditors, and the introduction of stricter oversight mechanisms over management. From an economic standpoint, the alternative plan is an opportunity for creditors to take control of the solution when the debtor insists on an unfeasible or abusive plan.

4. Control blocs at the General Meeting of Creditors: an informed mass instead of a passive audience

For cereal traders, the key point is straightforward. On their own, each creditor is merely a passenger. When organized, the group becomes the pilot or, at least, the co‑pilot in steering the reorganization process. Forming control blocs at the General Meeting of Creditors means mapping who the relevant creditors are in each class, identifying other cereal traders, cooperatives, trading companies, banks, and suppliers, and building at least a basic prior alignment on a few issues. Among these issues are what is acceptable in terms of tenors, haircuts, and collateral, and where the red line lies beyond which the group will reject the debtor’s plan and consider moving toward an alternative plan.

With this kind of coordination, the group of cereal traders can, first, influence the negotiation of the debtor’s plan by adjusting its terms during the discussion phase. Second, if necessary, it can orchestrate the rejection of the plan at the meeting, thereby opening the procedural door to an alternative plan. Third, it can nominate members to the Creditors’ Committee and influence the day‑to‑day conduct of the reorganization, through closer oversight, demands for information, and continuous monitoring of asset management.

With this kind of coordination, the creditor bloc ceases to be a mere instrument in the process and starts to operate as an informed collective, with its own agenda. That agenda typically includes preserving the economic value of claims, rejecting extensions and haircuts that are incompatible with the working-capital dynamics of agribusiness, and, in certain cases, pursuing the acquisition of assets that directly interest the chain, such as silos, warehouses, industrial plants, and origination infrastructure.

5. Outsourcing the position: the role of FIDCs​

Not every cereal trader wants or is able to be on the front line of a judicial reorganization. However, legislation and market practice allow specialized funds to purchase claims and take on this role on behalf of the original creditor. A Credit Rights Investment Fund (Fundo de Investimento em Direitos Creditórios, or FIDC) is a vehicle that allocates most of its assets to credit rights, that is, companies’ “accounts receivable.” Today, the involvement of FIDCs in purchasing claims against debtors undergoing judicial reorganization is already well established, effectively creating a secondary market for distressed receivables.

In the specific case of cereal traders, a recurring strategy is to assign the claim subject to reorganization to an FIDC, at a negotiated discount. From that point on, the fund becomes the formal creditor. It typically has a specialized legal team, the ability to concentrate positions by purchasing claims from several smaller creditors, and sufficient influence to lead the structuring of an alternative plan, voting as a bloc at the creditors’ meeting.

For the cereal trader, this move converts a judicialized claim, which is hard to value and has uncertain recovery prospects, into immediate liquidity, albeit at a discount, while outsourcing the burden of attending meetings, challenging claims, negotiating the plan, monitoring the debtor, and tracking asset sales. For those who wish to remain involved, there is also the option of partnering with a manager or fund, without necessarily selling the entire position, by combining their own claim with an interest in a structured vehicle.

6. The alternative plan as a route to asset takeover and a shorter solution​

One of the major advantages of the alternative plan is the ability to change the rules of the game. Instead of being tied to a debtor’s plan with a 20‑year term, long grace periods, a 70% haircut, and little transparency in asset sales, creditors have the opportunity to design a plan with a shorter overall term, a clear schedule for asset realization and payments, stricter control mechanisms over management and cash flow, and the possibility of taking direct or indirect ownership of strategic assets.

Based on the amended law, the alternative plan may provide for the capitalization of claims, turning creditors into shareholders of the restructured business, the removal of the current management with the appointment of new managers designated by the creditors, and the organization of the sale of isolated productive units or specific assets. Such sales may be directed to vehicles controlled by creditors or to strategic third parties, but must always take place under competitive and transparent rules.

For a group of cereal traders, this may mean converting a scenario of extended default into a realistic three‑ to five‑year plan. Within such a plan, it is possible to structure the orderly sale of silos, industrial facilities, and regional hubs, link long‑term supply contracts to these assets, and even create a new corporate vehicle to operate them, with direct participation by the creditors.

f the alternative plan is not submitted or is ultimately rejected, the prevailing legal trend is for the reorganization to be converted into bankruptcy, with a disorderly liquidation process and, as a rule, a worse economic outcome for trade creditors such as cereal traders. In many cases, the alternative plan is the last chance for an orderly solution before a bankruptcy scenario.

7. Conclusion

In plain terms, a cereal trader’s claim can indeed become trapped in a judicial reorganization and be targeted by abusive proposals. This is a concrete risk. However, it is not true that the only option is to accept the debtor’s plan and hope for the best. Current legislation gives creditors, particularly those who organize as a bloc, the power to reject a bad plan, propose an alternative plan, take over assets, and, in certain scenarios, assume control of the company or, if that is not the case, monetize the claim by selling it to FIDCs and other investors that take the lead in the restructuring.

For this to be feasible, a few steps are essential:

i. Mapping the claims by separating concursal from extraconcursal claims, identifying collateral, and classifying each claim according to its respective class.

ii. Pre‑organizing the cereal traders’ bloc before the meeting with a defined agenda, internal alignment, and clear negotiation boundaries; and​

iii. Relying on specialized legal and financial advisory services. to structure a robust alternative plan, whether by acting directly or through partnerships or credit assignments to specialized funds and investors.

More than a reaction, this move is a strategic choice. Instead of merely suffering the effects of judicial reorganization, the cereal trader begins to actively shape the outcome of the proceeding.

The full content presented at the Congress — the same material you find on this page — is also available in PDF format.​ Click here to download it.