Raízen: Chapter 15 Backstops R$98 Billion Brazilian Workout

Raízen S.A., the Cosan-Shell sugar, ethanol, and fuel-distribution joint venture, filed a Chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York on March 12, 2026 (lead case 26-10528, Judge Lisa G. Beckerman). The case is an ancillary proceeding to a Brazilian recuperação extrajudicial (EJ) — a class-binding, out-of-court statutory workout analogous to a U.K. scheme of arrangement or a U.S. prepackaged chapter 11 — that the 3rd Bankruptcy and Judicial Reorganization Court of São Paulo accepted on March 11–12 to restructure roughly R$98.63 billion of group obligations and R$65.14 billion of third-party "Subject Credits."

Lorival Nogueira Luz, Jr., the chief executive of Raízen S.A., serves as foreign representative. The petition was filed for nine jointly administered debtors spanning Brazilian operating companies, a Luxembourg notes-issuance vehicle, a Swiss trading entity, and a Delaware subsidiary, all of which the SDNY court ultimately recognized as having Brazilian centers of main interest. The Chapter 15 ask was narrow but urgent: import the Brazilian EJ statutory stay onto U.S. property and New York-law-governed debt before any single creditor could accelerate, attach, or set off against the group's roughly US$154 million in U.S. bank deposits.

Debtors	Raízen S.A. (9 jointly administered entities)
Court	U.S. Bankruptcy Court, Southern District of New York
Case Number	26-10528
Petition Date	March 12, 2026
Judge	Hon. Lisa G. Beckerman
Foreign Main Proceeding	3rd Bankruptcy and Judicial Reorganization Court of São Paulo, Brazil; case 4037759-13.2026.8.26.0100
Foreign Representative	Lorival Nogueira Luz, Jr. (CEO, Raízen S.A.)
U.S. Counsel	Cleary Gottlieb Steen & Hamilton LLP (Luke A. Barefoot)
Brazilian Counsel	Pinheiro Neto Advogados (Giuliano Colombo)
Claims Agent	Epiq Corporate Restructuring, LLC
Provisional Relief Order	March 16, 2026
Recognition Order (Foreign Main)	April 8, 2026

Brazilian Recuperação Extrajudicial and the Cross-Default Trigger

The proceeding the SDNY court was asked to recognize is governed by Federal Law 11.101/2005 — Brazil's reorganization statute — and is the country's analogue to a scheme of arrangement. Brazilian counsel Giuliano Colombo of Pinheiro Neto Advogados explained the EJ regime in an expert declaration supporting the petition: a debtor may file a plan negotiated with a subset of creditors and, on confirmation by holders of more than 50% of the principal amount of debt in each impaired class, the plan binds every creditor in those classes. Filing with at least one-third creditor support up front triggers a 180-day Brazilian EJ Stay suspending enforcement and most contractual set-off rights, and the debtor then has a 90-day window to gather the additional consents needed to clear the >50% threshold by class.

Raízen entered the EJ with the consent of holders representing approximately 47% of Subject Credits (excluding intercompany), comfortably above the 33⅓% statutory minimum. The Colombo Declaration attributes the distress to a stack of macroeconomic and operational pressures rather than a single shock: aggressive capex tied to second-generation (E2G) ethanol and the Biosev acquisition, a Selic policy rate sitting at roughly 15% for the eight months preceding the filing, drought and wildfires that compressed cane-harvest EBITDA, and persistent Argentine inflation. Group cash consumption ran at roughly R$7.2 billion between April and December 2025, and leverage hit a historical peak of about 5.3x. The 2024/2025 harvest produced a R$4.2 billion loss, and the 2025/2026 period showed a R$18.4 billion loss, much of it driven by accounting provisions tied to the restructuring itself.

The trigger for the filing was concrete. The company concluded that bilateral negotiations could not contain the threatened cross-default cascade across more than R$60 billion of debt instruments, and EJ filing was timed to import the Brazilian statutory stay before any single creditor could accelerate or attach. Bloomberg reported on March 11 that Raízen had reached agreement with creditors representing the threshold needed for an out-of-court rework of $12.6 billion of debt, and Law360 framed the U.S. side of the matter as an ethanol giant seeking U.S. recognition for a $12 billion Brazil reorganization.

R$98.63 Billion EJ Scope and New York-Law Note Architecture

The aggregate scope of the Brazilian EJ is R$98.63 billion. The Colombo Declaration breaks that into R$65.14 billion of third-party Subject Credits — the financial debt the EJ Plan is intended to restructure on a class-by-class basis — and R$33.49 billion of intercompany obligations, which are carried in the proceeding for completeness but are not the focus of class voting. Bloomberg Law described the cross-border architecture as designed to shield approximately $154 million in assets from creditor self-help while the broader plan is negotiated in São Paulo.

Seven of the nine Chapter 15 debtors carry New York-law-governed debt instruments — including Raízen S.A., Raízen Energia S.A., Raízen Centro-Sul S.A., Raízen Centro-Sul Paulista S.A., Blueway Trading, and the Luxembourg finance vehicle — and Raízen Fuels Finance S.A.'s entire debt stack is governed by New York law. Raízen Fuels Finance is a pure notes-issuance SPV with no operations, employees, or assets in Luxembourg; proceeds from its bond issuances are on-lent into the Brazilian operating group. Three organized creditor formations have appeared through U.S. counsel — an Ad Hoc Group of Raízen Noteholders, holders of the Series 2 Notes, and the Bank of New York Mellon as indenture trustee — although the substantive plan vote will occur in the Brazilian court rather than under §1129.

The Provisional Relief Motion disclosed more than US$154 million (about R$0.8 billion) in U.S. bank accounts as of March 9, 2026, with Raízen North America's largest deposit account in New York. Certain Brazilian financial creditors held contractual rights to appropriate up to R$8.3 billion from group bank accounts to amortize debt, and the company sought to interrupt that set-off pipeline through the Brazilian and U.S. stays before the EJ vote.

Provisional Stay, Set-Off Exposure, and §1519 Relief

The Provisional Relief Motion was filed the day after the petition and identified pre-recognition creditor self-help as the impetus for the §362 stay. At least one Brazilian creditor had already moved to accelerate and exercise set-off, one freezing of a U.S. deposit account had occurred, and other creditors had delivered default notices threatening acceleration. The relief sought was the standard §1519 package: apply the §362 automatic stay to the debtors and their U.S. property pending recognition, with the safe-harbor carve-outs for swaps, repos, and securities contracts preserved.

On March 16, 2026, the SDNY court entered the Order Granting Provisional Relief, applying the §362 stay to the debtors and their property within the territorial jurisdiction of the United States, effective immediately. The order ran until the earlier of a final ruling on recognition or termination of the Brazilian EJ Stay, was without prejudice to creditors seeking modification, and did not enjoin any conduct that §1519(d) prohibits a Chapter 15 court from enjoining at the provisional stage. The same day, the court also granted joint administration of the nine cases.

Recognition followed on a compressed schedule. Petitioner's recognition brief was filed April 3, the recognition hearing was held April 7, and on April 8 the court entered the Order Granting Recognition of the Brazilian recuperação extrajudicial as a foreign main proceeding under §1517 for all nine debtors. The order recognized Raízen S.A. as foreign representative under §101(24), imposed the §362 stay on debtors' U.S. property under §1520, preserved the §§362(b), 546, 555, 556, 559, 560, 561, and 562 safe-harbor carve-outs for securities, commodity, forward, repo, swap, and master netting agreements, and required service on Notice Parties within seven business days. With recognition in place, the U.S. ancillary protections lock in; the substantive class-by-class plan negotiation continues in São Paulo.

Brazilian COMI for the Luxembourg, Delaware, and Swiss Vehicles

Three of the nine debtors are not Brazilian and required tailored center-of-main-interest analysis because the §1516(c) presumption attaches to the place of registered office. The Recognition Brief walked through each. Raízen Fuels Finance S.A., the Luxembourg notes-issuance SPV, has no operations, employees, or assets in Luxembourg; its note proceeds are on-lent to the Brazilian operating group, board decisions require the assent of at least one Brazil-based director, and debt documents direct investor inquiries to Raízen's principal executive office in São Paulo. Raízen North America, Inc. (Delaware) and Raízen Trading S.A. (Switzerland) function as outposts of the Brazilian group, with strategic direction and management originating from São Paulo. The court accepted the petitioner's "nerve center" theory and recognized all three offshore vehicles as having Brazilian COMI alongside the operating debtors.

The Brazilian COMI ruling places the Luxembourg and Swiss debt within the Brazilian class structure rather than a separate U.S. plenary case or a foreign nonmain proceeding.

Three Ad Hoc Creditor Groups and the Equitization Fight

Although recognition itself was uncontested, the U.S. docket reflects three organized creditor formations and one indenture trustee that have appeared through pro hac vice U.S. counsel, signaling a contested plan negotiation in São Paulo. The Ad Hoc Group of Raízen Noteholders is represented by White & Case LLP, with Richard S. Kebrdle and Samuel F. Kava admitted pro hac vice on March 16. The holders of the Series 2 Notes are represented by Baker McKenzie, with Paul J. Keenan, Jr. admitted pro hac vice on March 18. The Bank of New York Mellon, as indenture trustee, appeared through Reed Smith LLP — Aaron Javian and Luke A. Sizemore — on April 6. Laura E. Appleby of the U.S. Trustee for Region 2 appeared on April 7.

The substantive negotiation is happening offshore but is well-reported. By early April, creditors had already sought changes to Raízen's restructuring plan, pressing for a larger capital injection from shareholders and revisions to the debt-to-equity conversion terms. Bank creditors presented a restructuring proposal calling for a debt-for-equity swap that would convert about 45% of the company's debt and leave the lender group holding up to 90% of Raízen's equity. Reuters reported in late April that the company had submitted an alternative restructuring proposal on the R$65 billion of debt under negotiation, and Brazilian press reported a counter-offer including up to R$5 billion in fresh cash but rejecting loss of board control. Debtwire framed the matter as potentially the first Brazilian EJ to test imposition of debt equitization on non-consenting creditors.

The 90-day post-filing window to push class-by-class consent above 50% has been referenced in Brazilian press as a roughly June 6, 2026 working deadline for the São Paulo vote.

Pre-Filing Distress and Ratings Cascade

The capital-markets pressure that preceded the filing began in late 2025. On December 9, 2025, B3 issued a notice that Raízen's share price had fallen below the minimum required value, with a rectification deadline of May 29, 2026. The group reported R$17.3 billion of cash and investments at year-end 2025, with roughly 90% in immediate liquidity. By February 2026 the company was facing a pronounced bond sell-off and short-squeeze activity in RAIZ4 shares; financial advisors were retained, and the CVM, Brazil's securities regulator, opened an inquiry into the group's debt and capital structure.

The credit-ratings cascade arrived immediately on the heels of the EJ announcement. S&P moved Raízen to 'SD' from 'CCC-' on March 13, treating the request for an out-of-court restructuring as a distressed exchange. Fitch downgraded Raízen and Raízen Energia to 'C' on March 12, citing the announced 90-day standstill and potential debt-for-equity conversions. Moody's followed on March 19, downgrading Raízen to 'Ca' with a stable outlook — a third-agency move that placed the group one notch above default on the Moody's scale. By March 9, three days before the petition, incremental pre-petition cash consumption had reached R$1.9 billion, and U.S.-located deposits totaled the US$154 million figure that anchored the §1519 motion.

The Chapter 15 record is silent on tranche-level breakdowns of the New York-law debt — coupons, maturities, indenture trustees by series — and the substantive EJ Plan exhibit (referenced as Annex Doc. 1 to the Colombo Declaration) has not been analyzed in the U.S. record. Class-by-class treatment, projected recoveries, new-money components, and the final equitization mechanic remain in the Brazilian filings and ongoing creditor negotiations rather than the SDNY docket.

Key Timeline

Frequently Asked Questions

What did Raízen file in the United States?

Raízen S.A. and eight affiliates filed Chapter 15 petitions in the U.S. Bankruptcy Court for the Southern District of New York on March 12, 2026 (lead case 26-10528) seeking recognition of a Brazilian recuperação extrajudicial as a foreign main proceeding. The SDNY court granted provisional §362 relief on March 16 and entered the recognition order on April 8.

What is a Brazilian recuperação extrajudicial?

It is a court-supervised, class-binding out-of-court restructuring under Federal Law 11.101/2005 — Brazil's analogue to a U.K. or Cayman scheme of arrangement and to a U.S. prepackaged chapter 11. A debtor may file with at least one-third creditor support, triggering a 180-day stay, and must obtain confirmation by holders of more than 50% of the principal in each impaired class.

Who is the claims agent for Raízen?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

Why did the SDNY court need to recognize the Luxembourg, Swiss, and Delaware debtors as Brazilian-COMI?

The §1516(c) COMI presumption attaches to the place of registered office. The Recognition Brief argued — and the court accepted — a "nerve center" theory: the Luxembourg notes-issuance SPV (Raízen Fuels Finance S.A.), the Delaware subsidiary (Raízen North America, Inc.), and the Swiss trading entity (Raízen Trading S.A.) all run through São Paulo for management, board action, and investor communications.

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