Brazil & Southern Cone - October 2026

Casas Bahia, one of the country’s historic brick-and-mortar leaders in sales of white goods, filed for bankruptcy protection in São Paulo on 16 August, just days after announcing dramatic cuts to the size of its staff and sales outlets. It is the latest of several big-name Brazilian companies, including various traditional retailers, that have run into financial trouble and filed for protection from creditors, highlighting the country’s difficult business environment in certain industries.

Only three years ago, Lojas Americanas, the most traditional Brazilian retailer, went the same route after a massive financial scandal involving large-scale accounting fraud [EB-23-04]. The list of other household names that have had to file for ‘recuperação judicial’ – the Brazilian equivalent of US Chapter 11 proceedings – includes furniture stores Tok&Stok and Lojas Marabraz, and clothing brand Zinzane.  

The troubles of many of these companies started years ago and have been driven by a range of factors, from poor management to online competition and macroeconomic instability. Like brick-and-mortar retailers elsewhere, in Brazil too profit margins have been reduced due to online sales, making it difficult to uphold a network of physical sales outlets. Many retailers survived by adopting cost-cutting measures and setting up their own online outlets.

But the big-name retailers are just the most visible aspect of a deeper crisis affecting corporate Brazil. Over the past three years, the number of companies filing for bankruptcy has mushroomed, rising from roughly 4,000 in 2023 to nearly 6,500 in the first half of 2026, according to consultancies RGF and BizDoc. Only 23% of the companies that file for ‘recuperação judicial’ continue operating. The rest shut down for good.

It was the coronavirus (Covid-19) pandemic in 2020 that triggered a recession and a sharp rise in unemployment, exposing structural vulnerabilities in corporate Brazil. To help offset the immediate impact of the crisis, many companies took on bridge loans to help manage their financial needs.

Then a spike in inflation and deteriorating public finances pushed up interest rates and dramatically increased the cost of those very same loans that had been a lifeline to many Brazilian companies. The central bank’s prime lending rate, the Selic, jumped from 2% per year in 2020 to 15% in August of last year.

That not only increased the financial costs of companies, it also eroded the revenue for those relying heavily on credit-driven sales. Given that household appliances and other domestic goods are often bought on credit, the dramatic rise in interest rates weighed on sales, but also increased loan defaults for those who had already acquired goods or services.

The impact has been widely felt, contributing to an economic slowdown and squeezing household finances. In August 2026, 84m consumers, or 51% of the adult population, had defaulted on their debt, according to Serasa Experian, a credit scoring, management, and analysis company.

In its bankruptcy filing, Casas Bahia cited “high interest rate levels, credit constraints, rising financial costs, and pressure on consumption and working capital” among the factors that led to the deterioration of the company’s financial situation. Before turning to court for protection from creditors, the white goods retailer announced it would shutter nearly 300 of its more than 1,000 stores and fire roughly 3,000 employees.

Rate cuts

Although Brazil’s benchmark interest rate (Selic) remains in double digits, the central bank has been lowering the rate since March this year. The bank’s monetary policy committee (Copom) decided in September to lower the Selic rate to 13.75%. However, it is uncertain how much longer the rate-cut cycle will continue. In September, Copom projected that Brazil’s annual inflation this year would reach 5.2%, well above the upper bound of the target range of 3.0% +/-1.5.