Cross‐border insolvency in Brazil: The impact of substantive consolidation on parallel insolvency proceedings

Abstract This article examines the interaction between substantive consolidation and parallel insolvency proceedings under Brazilian law following the enactment of Law No. 14,112/2020, which introduced both a cross‐border insolvency regime based on the UNCITRAL Model Law on Cross‐Border Insolvency (MLCBI) and statutory rules governing substantive consolidation of corporate groups. Although these reforms significantly strengthened the Brazilian insolvency framework, important interpretative challenges remain when multinational corporate groups become subject to insolvency proceedings in multiple jurisdictions. The article focuses on the tensions arising from the coexistence of substantive consolidation and parallel proceedings, particularly where the same creditors and claims are affected by proceedings conducted in different countries. After examining the treatment of concurrent proceedings under the MLCBI and the Brazilian Bankruptcy Code, the article analyses the Ambipar Group case, which, as of August 2026, is the first Brazilian restructuring to combine court‐authorised substantive consolidation with parallel Chapter 11 proceedings in the United States. The case raises novel questions concerning the coordination of proceedings, judicial cooperation in the absence of reciprocal recognition requests, creditor protection and the impact of foreign proceedings on voting dynamics and restructuring outcomes. The article argues that the principal challenge posed by parallel proceedings lies not in their coexistence, but in the overlap of creditors and claims across jurisdictions. It concludes that effective cross‐border insolvency administration requires proactive cooperation and coordination mechanisms, including direct court‐to‐court communication, to preserve equal treatment among creditors, maximise value and promote efficient corporate restructuring.