The global restructuring of Brazilian environmental and emergency services provider group Ambipar is approaching a crucial juncture. In October 2025, the group simultaneously commenced a judicial recovery in Brazil and a Chapter 11 in the US. Both cases have, from the outset, been marked by intense litigation involving an ad hoc group of bondholders and another ad hoc group of Brazilian banks.

The group of bondholders is represented by White & Case in the US, and Padis Advogados along with Ferro Castro Neves Daltro & Gomide Advogados, in Brazil, and comprises approximately 20 members, including AllianceBernstein, Capital Group, and Nine Left Capital. The group of Brazilian banks is represented by Davis Polk & Wardell and includes Itaú Unibanco, Bradesco, Santander (Brasil), Banco Safra, BMG, Banco ABC Brasil, Banco do Brasil, and BTG Pactual.

After reaching an agreement with the ad hoc bondholder group in the US whose support, following substantive consolidation authorized in Brazil, would be sufficient to cram down Brazilian banks, the company appears to be using the US Chapter 11 process to offer bondholders more favorable recovery terms than those available to domestic creditors in Brazil, including the banks. On 23 May 2026, the ad hoc group of Brazilian banks filed a motion in the Chapter 11 case requesting that the US bankruptcy court allow the late filing of their claims, also relying on the substantive consolidation. On 4 June, Brazilian government-controlled bank Caixa Econômica Federal (CEF), which is not part of the group and is represented by Clifford Chance, made the same request through a separate motion.

With the motions of the Brazilian banks scheduled to be heard by the US Court on 22 June, below Debtwire’s legal analyst team examines the main arguments and strategies advanced by the involved parties and discusses how a cross-border insolvency rule recently introduced into Brazilian bankruptcy law could increase local creditors’ chances of success.

Parallel in-court restructurings and related financial debt

On 20 October 2025, holdco Ambipar Participações and 71 affiliates of the group, including Cayman Islands-based Ambipar Emergency Response (Cayman Ambipar), commenced a judicial recovery process with the Third Business Court of Rio de Janeiro, seeking oversight to restructure roughly BRL 12.37bn (USD 2.4bn) in debt.

The majority of prepetition claims impaired by the judicial recovery relate to the USD 553m 9.875% senior unsecured green bonds due in 2031 and USD 493m in 10.875% senior unsecured green bonds due in 2033. These claims were listed on behalf of The Bank of New York Mellon, at that time the trustee of the notes, in the amounts of USD 560.4m and USD 500.5m, respectively. Other relevant prepetition unsecured financial claims were listed on behalf of (i) the Brazilian banks mentioned above and (ii) Oliveira Trust, acting as trustee for the Ambipar’s domestic bonds (debentures).

Also on 20 October 2025, Cayman Ambipar filed a Chapter 11 petition with the US Bankruptcy Court for the Southern District of Texas. The company reported liabilities of USD 328.2m, of which USD 328.1m related to its guarantee of the two series of green bonds. In support of the Chapter 11 petition, the company’s director, Thiago da Costa Silva, submitted a declaration stating that, although the aggregate outstanding principal amount on the bond debt was approximately USD 1.05bn, Cayman Ambipar’s guarantee is limited to approximately USD 328.1m. Da Silva further noted that the green notes were also guaranteed by other Brazil-domiciled entities within the Ambipar group.

The simultaneous US and Brazilian bankruptcy filings caught the market by surprise and raised questions about the company’s true financial condition, as its publicly disclosed financial statements as of 30 June 2025 showed approximately BRL 4.7 billion in consolidated cash. In his declaration, da Silva mentioned that, unlike the other entities of the Ambipar group participating in the Brazilian judicial recovery, Cayman Ambipar is a US-listed public company with debt governed by US law that is held by dozens of bondholders.

Da Silva further noted that Chapter 11 was necessary to protect Cayman Ambipar’s direct and indirect assets, ensure fair treatment among its stakeholders, and provide a readily accessible forum for global parties-in-interest to be heard in connection with the company’s restructuring. In addition, he asserted that Cayman Ambipar initially considered commencing a proceeding under Chapter 15 but, at the time of the filing, a parallel proceeding under Chapter 11 appeared to be more appropriate to preserve the best interests of its estate and maximize value for all stakeholders.

Fierce litigation in Brazil

In Brazil, both the ad hoc group of local banks and the ad hoc group of bondholders challenged the local court’s authorization for the Ambipar corporate group to proceed with the judicial recovery on a substantive consolidation (subcon) basis. Subcon refers to the pooling of the assets and liabilities of all filing entities into a single plan. Widely regarded as one of the most controversial issues in the country’s bankruptcy regime, the matter gained an additional layer of complexity due to the parallel Chapter 11 filing by Cayman Ambipar which, in practice, has resulted in an overlap of bond-related claims.

The two ad hoc groups also complained about Ambipar’s failure to pursue international cooperation and coordination in its parallel reorganization proceedings. Against this backdrop, they warned the Brazilian court that court-to-court coordination is pivotal to enhancing legal certainty and predictability, as the US Chapter 11 case poses concrete and relevant risks to the Brazilian judicial reorganization. They further argued that decisions in the US Chapter 11 case could directly affect the Brazilian case, given that the Chapter 11 process is a full restructuring with independent legal consequences.

According to both ad hoc groups, if the US case proceeds, Cayman Ambipar could be forced to restructure independently, which could result in the company and its subsidiaries being carved out of the broader Ambipar group, thereby affecting the authorization for subcon and increasing uncertainty around Brazilian creditors’ recovery expectations in the judicial recovery proceeding.

In addition to those cross-border concerns, Brazilian banks and bondholders have also filed objections to the debt restructuring plan proposed in Brazil, arguing that the repayment proposals provided for therein unfairly shift the burden of Ambipar’s financial overhaul entirely onto creditors, while offering no meaningful contribution from Ambipar shareholders.

Litigation in the US and agreement with ad hoc group of bondholders

In parallel with these disputes in Brazil, Cayman Ambipar in mid-February 2026 asked the US bankruptcy court overseeing its Chapter 11 case to extend its exclusive period to file a Chapter 11 plan by 75 days. In early March, the ad hoc group of bondholders objected to the request, arguing that the debtor have failed to engage in meaningful negotiations with creditors since the commencement of the case.

In early May, Ambipar reached an agreement with the ad hoc group of bondholders that resolved their objections and set a firm deadline for filing a reorganization plan within the exclusivity period. Under the agreement, Cayman Ambipar would transfer 100% of its equity to its general unsecured creditors – i.e., to the bondholders. The proposal also provides for full repayment to bondholders, including certain post-petition claims, default interest, and professional fees.

The ad hoc group of Brazilian banks, by contrast, remain in dispute with Ambipar. A few days after learning of the agreement between the company and the ad hoc group of bondholders, they challenged the scope of the proposed exclusivity order in the Chapter 11 case, arguing that it would result in the immediate approval of material concessions negotiated solely with the ad hoc bondholders, including the payment of their claims with assets located in the US.

The dispute led Cayman Ambipar to file a revised version of the proposed order, removing references to the agreement and focusing instead on extending the exclusivity period to file the plan. US Bankruptcy Court Judge Alfredo Perez issued the revised proposed order on 18 May.

On 23 May 2026, the group of Brazilian banks asked the US bankruptcy court to allow the late filing of their claims in the Chapter 11 case, stating that they had received no notice of the bar date. According to the Brazilian banks, Ambipar “deliberately chose not to provide the Claimants with actual notice of the chapter 11 case or the Bar Date. The Debtor did not even publish notice of the Bar Date in the [Brazilian proceeding].” A similar request was made by government-controlled bank CEF through a separate motion.

In their filings, the Brazilian bank group and CEF sought an order permitting them to file proofs of claim after the bar date and to have those claims deemed timely. They argue that they should also be deemed creditors of Cayman Ambipar as a result of the Brazilian court order authorizing subcon in the judicial recovery proceeding, in which the company is also a filing entity.

Cayman Ambipar objected to these requests also on 23 May, arguing that there was no urgency requiring expedited court action. On 24 May, the ad hoc bondholder group joined the company’s objection, reiterating the lack of urgency and arguing that the Brazilian banks’ motions were “premature plan objections’ as Ambipar had not yet filed a plan, so no imminent event justified emergency relief.

Judge Perez scheduled a hearing to rule on the matter for 22 June.

Chapter 11 judge is a lifeline for Brazilian creditors, while in Brazil the hotchpot rule may prove equally decisive

Ambipar’s case is an unprecedented situation in Brazil as there are two simultaneous restructuring proceedings set to restructure the same debt. Bondholders and Brazilian banks were initially aligned, but the agreement reached between the company and the bondholder group appears to have triggered an intercreditor dispute playing out in both Brazil and the US.

The company’s primary strategy appears to be to keep the two proceedings as independent as possible, while also securing the support of bondholders – who hold the majority of claims in the Brazilian reorganization – by offering more favorable recovery terms through the Chapter 11 case.

Following the Brazilian court’s authorization for subcon, the favorable vote of bondholders appears sufficient to secure approval of a single plan for the Ambipar group in the Brazilian case. The ‘equivalent’ treatment offered to the bondholders and the Brazilian banks in Brazil may, in turn, support the argument that the plan complies with the principle of equal treatment among creditors within the same class, potentially leading the Brazilian court to ratify a creditor approval of the plan.

From the perspective of the Brazilian banks, the primary defense strategy appears to be to seek to obtain a share of the distributions made in connection with the US Chapter 11 case, thereby attempting to benefit from the effects of the subcon order issued in the Brazilian proceeding. In this scenario, the subcon strategy could backfire on the company, leaving it to the US bankruptcy court judge to determine the extent to which developments in the Brazilian proceeding may affect decisions in the Chapter 11 case.

Additionally, Brazilian banks may still raise a final argument to prevent the local court from confirming the approval of the creditors’ plan. Under Section 167-Y of the Brazilian Bankruptcy Law, which corresponds to Article 32[1] of the UNCITRAL[2] Model Law on Cross-Border Insolvency, a creditor who has received partial payment of its claim in insolvency proceedings abroad may not receive payment on the same claim in Brazilian proceedings involving the same debtor, unless creditors of the same class are paid proportionally at least the same amount.

The ad hoc group of bondholders, in contrast, could argue that they would not be recovering on exactly the same claims in the two parallel proceedings, because the debt to be recovered via the Chapter 11 case is limited to the USD 328.1m stemming from the guarantee provided by Cayman Ambipar to the bonds, while total bond debt to be recovered through the Brazilian judicial recovery amounts roughly USD 1.05bn.

In this scenario, it would be up to the Brazilian judge to decide whether the provision set forth in Section 167-Y of Brazilian bankruptcy law applies to the case. Although we are not aware that there has any formal coordination or communication to date between the courts overseeing Ambipar’s parallel proceedings, applying this provision in Brazil could lead the local judge to invalidate plan provisions granting bondholders the right to be paid on the same terms as the ad hoc group of Brazilian banks, thereby triggering the hotchpot rule[3] to prevent bondholders from recovering distributions on part of their claims in the Chapter 11 case of Cayman Ambipar, and simultaneously sharing recoveries with the other creditors in Brazil. On the flip side, the Brazilian court could also decide that the rule does not apply in this case, reasoning that the Chapter 11 case is aimed at the recovery of different claims.

Arthur Almeida is a former restructuring attorney. Prior to joining Debtwire as a Legal Analyst, he practiced with Passos & Sticca Advogados Associados, and worked in the legal department of Banco Fibra S.A. Arthur’s experience includes participating in major civil litigation on credit recovery, representing creditors such as banks and financial institutions in high-profile restructurings. He obtained his Master’s in Commercial Law from Universidade de Sao Paulo (at which he is also a researcher in the Insolvency Law Study Group – GEDEC), and his LL.M in Financial and Capital Markets Law from Insper Instituto de Ensino e Pesquisa.

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Endnotes:

[1] Article 32. Rule of payment in concurrent proceedings: without prejudice to secured claims or rights in rem, a creditor who has received part payment in respect of its claim in a proceeding pursuant to a law relating to insolvency in a foreign State may not receive a payment for the same claim in a proceeding under [identify laws of the enacting State relating to insolvency] regarding the same debtor, so long as the payment to the other creditors of the same class is proportionately less than the payment the creditor has already received.

[2] United Nations Commission on International Trade Law.

[3] The hotchpot rule in international insolvency law is a principle designed to ensure equal treatment of creditors across jurisdictions. The rule requires a creditor who has already received a distribution on its claim in one jurisdiction to account for that recovery (“bring it into the hotchpot”) before participating in distributions in another jurisdiction. In practice, the creditor can only recover up to the amount it would have received if all assets had been distributed in a single, unified proceeding.