When the Judiciary Weakens Guarantees, Rural Credit Faces Greater Risks

According to Serasa Experian, the agribusiness sector recorded 1,990 judicial reorganization filings in 2025, the highest number in its historical series, and an additional 474 filings in the first quarter of 2026. Against this backdrop, Provisional Measure No. 1,376, published on July 15, 2026, authorized credit lines for the restructuring of rural debts, expressly determining that loan agreements comply with the internal policies of financial institutions and ensuring the review of collateral, including its expansion whenever existing guarantees are insufficient for the new transaction.

However, for those who extend credit, it is not enough that the debtor possesses assets. Those assets must be effectively reachable if the debt remains unpaid. It is precisely at this point that two decisions issued by the Third Panel of the Superior Court of Justice (STJ) on December 9, 2025, restrict the alternatives available to rural creditors.

In REsp 2.221.144/RS, the Panel prevented enforcement against the spouse who had acted as guarantor (avalista) for an individual entrepreneur undergoing judicial reorganization, where the couple was married under the universal community property regime. The Court held that the common assets constituted the same pool of assets subject to the reorganization plan.

The creditor further argued that the assets related to the business activity could be distinguished from the entrepreneur’s personal assets. However, the Court regarded them as a single patrimonial mass, preventing enforcement from proceeding, even after the judicial reorganization process had concluded. Such enforcement would only become possible if the patrimonial confusion ceased to exist, such as through the dissolution of the marital property regime. As a result, the guarantee (aval), which had been granted precisely to provide the creditor with an additional source of recovery, ultimately lost its practical function.

Similarly, in REsp 2.233.886/RS, the Panel extended the constitutional protection against seizure applicable to small rural properties to rural land pledged through a fiduciary transfer of ownership (fiduciary collateral assignment), thereby preventing the extrajudicial consolidation of ownership. In that case, the collateral had been voluntarily granted to a credit cooperative, yet the guarantee was nevertheless rendered unenforceable. However, the decision remains subject to review through the pending motion for divergence (embargos de divergência).

The protections recognized by the STJ are grounded in legitimate legal principles. The immunity from seizure of small family-owned rural property is expressly provided for in Article 5, Item XXVI, of the Brazilian Federal Constitution, while equality among creditors constitutes a fundamental principle of judicial reorganization proceedings.

The concern, however, lies in the subsequent neutralization of guarantees that were validly created and accepted by creditors as a condition for extending credit.

While the legislature, through the Legal Framework for Guarantees (Law No. 14,711/2023), sought to improve credit recovery mechanisms and, consequently, reduce default rates, lower the cost of credit, and accelerate asset recovery in the event of contractual breaches, recent judicial decisions appear to move in the opposite direction.

As a consequence, creditors recalculate risk even before any new default occurs, demanding additional collateral, reducing credit limits, shortening repayment terms, or increasing financing costs. Because financial institutions, credit cooperatives, agricultural input suppliers, and commodity trading companies also depend on access to credit, those costs ultimately flow through the supply chain and return to rural producers, particularly compliant borrowers and small producers who have few additional assets to offer as collateral.

Furthermore, it is important to consider the growing costs and delays associated with increasing judicialization. According to the National Council of Justice (CNJ), the Brazilian Judiciary closed 2025 with 75.5 million cases pending and a congestion rate of 62.6%.

Therefore, it is important to understand that protecting agribusiness does not simply mean protecting distressed debtors. Abundant and affordable rural credit cannot be sustained in an environment where honoring contractual obligations carries less value than litigating them before the courts.