Brazil: Third largest brewer files for “Judicial Reorganization”

Brazil's third-ranking brewer, Cervejaria Petrópolis S.A., has filed for “Judicial Reorganization” in a Rio de Janeiro court on Monday. “The company adopted this recourse with the aim of maintaining its regular operation and production as well as preserving the 24 thousand direct jobs and an estimated 100 thousand indirect jobs generated,” Petropolis said on its website.

Judicial Reorganization is a procedure contemplated by law, used to restructure debts incurred by momentary cash flow difficulties. According to reports, Petropolis' total debt stands at BRL 4.4 billion (USD 890 million), comprising 48 percent financial debts and 52 percent owed to suppliers and third parties. In 2022, the company's revenues amounted to BRL 13 billion (USD 2.6 billion), representing a decrease of 4.4 percent compared to 2021.

Petropolis attributes its financial struggles to problems during the pandemic, the macroeconomic environment and actions by competitors. They raised concerns about some companies taking advantage of tax benefits, putting Petropolis at a disadvantage. The company also accuses competitors of not passing on cost hikes to consumers, affecting sales and financial health.

People close to the matter have linked Petropolis' financial situation to its previous owner, Walter Faria, who bought Grupo Petropolis in 1998 and transformed it into one of Brazil's largest beer-and-beverage companies. Accused of being involved in Brazilian’s largest corruption scandal (, 5.5.2017), it turned out that amongst other things Faria and his Grupo Petrópolis bribed Sérgio Cabral, former governor of the state of Rio de Janeiro (, 26.3.2019). As a consequence, Faria was arrested in August 2019 and his daughter Giulia Faria assumed control of the group.

”It is important to stress that Judicial Reorganization does not mean bankruptcy. As the name implies, it is only a judicial resource used to protect the company’s cash from possible withholdings and represents an alternative of healthy negotiation with the creditors,” the company explains on its website.

Judicial Reorganization foresees the drafting of a plan that must be approved by the majority of the creditors, in which the terms for payment of the debts will be set out. The company will initiate negotiations with creditors but has to secure also an agreement with financial institutions to approve the plan.

“The Group, with 100% national capital and with over 30 years of tradition, is committed to resolving the situation as soon as possible and to ensure the maintenance of the operation, the quality of its products, the supply of the distribution chain and, consequently, its ability to generate revenue, as well as honor its obligations to employees, suppliers and partners,” the statement goes on.

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