The premise is simple, and often overlooked in agribusiness: preserving the economic activity is not the same as preserving the Debtor as manager. The creditors’ bargain theory, developed by Thomas H. Jackson, is based on a hypothetical agreement among rational creditors to maximize the value of the asset pool through a collective procedure that reduces individual races to enforce claims and minimizes coordination costs.
In bankruptcy, assets are allocated for creditor repayment (articles 75, 83, and 84); saving the agent who operated them is, at most, a means — never an end in itself.
In agribusiness, this understanding is crucial. The sector depends on capital intensity, tight cycles, barter arrangements with suppliers, advance payments from trading companies, high-cost technology, and transport contracts sensitive to delays. A significant portion of assets is encumbered by fiduciary ownership and receivables locks. Court-Supervised Reorganization, which assumes a credible restructuring of liabilities and new capital, often becomes a burden when, in economic terms, without new governance and robust financing, it turns a balance sheet problem into a cash flow problem — and, at times, into net value destruction.
Hence the importance of recognizing when reorganization becomes a burden, and bankruptcy becomes the path to preservation through entrepreneurial substitution. The argument is not moral, it is functional. In modern bankruptcy law, the company is an organized activity, not the person of the Debtor. Preserving the activity means keeping assets in productive use, even if under different corporate entities. When reorganization depends on capital that never comes or governance that never materializes, the process drags on, cycles are lost, the collateral base depreciates, and “more time” merely postpones the inevitable. The creditors’ bargain sheds light on this point: rational creditors would choose the solution that maximizes present value.
To avoid misunderstanding, it is worth highlighting two practical limits of bankruptcy. First, “selling quickly” is not “selling poorly”: there is room to organize asset sales that capture synergies (e.g., joint sale of land, machinery, and transferable supply/storage contracts), increasing the price and facilitating the material continuity of the operation under new ownership. Second, the contours of each security interest are respected: assets under fiduciary ownership are not part of the estate; secured claims follow their order of preference; and non-estate claims are paid first. The role of the process is to redesign possession and ownership to enable new productive use — not to erase rights.
A relevant precedent concerning the application of bankruptcy to a rural producer is the Grupo Foco case, led by Foco Agronegócios S.A., whose Court-Supervised Reorganization was converted into Bankruptcy (case records No. 0002360-65.2020.8.27.2721 – TJTO). Given creditor rejection of the plan, the court found that the most appropriate protection for creditor interests was the bankruptcy regime. The bankruptcy was declared on 01/20/2022 and is currently in the asset collection and liquidation phase.
In certain scenarios, bankruptcy is what truly preserves the activity. When reorganization fails to deliver capital, does not restructure governance, and only consumes cash, the efficient — and legally correct — path is bankruptcy with swift asset sales, redirecting assets to capable operators, realizing value for creditors, and keeping the production engine running under new management. That is the logic of the creditors’ bargain applied to agribusiness: less rhetoric, more cash flow; less attachment to the Debtor and more preservation of activity, with legal certainty for creditors.
Available in: https://www.agroplanning.com.br/2025/10/01/produtor-rural-e-o-paradigma-falimentar/
References:
- Law No. 11,101/2005 (with amendments to Law No. 14,112/2020);
- Jackson, Thomas H. The Logic and Limits of Bankruptcy Law. Cambridge, MA: Harvard University Press, 1986.
Autor: Jhonatan Luis Marques Poiana • email: jhonatan.poiana@ernestoborges.com.br
