{"id":1007186,"date":"2026-03-31T15:30:40","date_gmt":"2026-03-31T18:30:40","guid":{"rendered":"https:\/\/souzaokawa.com.br\/a-warning-on-the-need-for-due-diligence-and-counterparty-risk-assessment\/"},"modified":"2026-04-06T06:42:01","modified_gmt":"2026-04-06T09:42:01","slug":"a-wake-up-call-on-the-need-for-due-diligence-and-counterparty-risk-assessment","status":"publish","type":"post","link":"https:\/\/souzaokawa.com.br\/en\/a-wake-up-call-on-the-need-for-due-diligence-and-counterparty-risk-assessment\/","title":{"rendered":"A Wake-up Call on the Need for Due Diligence and Counterparty Risk Assessment"},"content":{"rendered":"\t\t
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By Eduardo Salles<\/a> and Jo\u00e3o Pedro Zaidel<\/a><\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Recent out-of-court restructuring filings by major Brazilian companies, such as Grupo P\u00e3o de A\u00e7\u00facar and Ra\u00edzen, have reignited an important concern in the business environment: the need for thorough counterparty due diligence prior to entering into legal transactions.<\/p>

More than a contractual review, this process requires a deep understanding of the actual financial condition of the company involved.<\/p>

Although this may seem intuitive, it is not uncommon for risk assessments to be overlooked or conducted superficially, particularly when dealing with large and seemingly reputable economic groups.<\/p>

In GPA\u2019s case, the proposed plan involves the renegotiation of approximately BRL 4.5 billion in debt with financial creditors. Ra\u00edzen, in turn, has filed for an out-of-court restructuring involving a substantial amount of liabilities, estimated in the tens of billions of reais, making it one of the most significant proceedings of its kind ever recorded in Brazil. These figures highlight the scale and complexity of the restructurings currently underway in the Brazilian market. <\/p>

In this context, counterparty due diligence must go beyond the formal verification of documents. In any transaction\u2014whether real estate, corporate, contractual, or investment-related\u2014certain aspects deserve particular attention: <\/p>

Assessment of financial health, including balance sheets, debt structure, and cash flow;<\/p>

  • Identification of the company\u2019s economic stage, with a focus on potential signs of financial distress;<\/li>
  • Verification of the regularity of corporate approvals and the authority of signatories;<\/li>
  • Mapping of relevant liabilities and any ongoing negotiations with creditors.<\/li><\/ul>

    These measures serve as essential risk mitigation tools in a scenario where financial deterioration can occur rapidly, even in large and historically solid companies.<\/p>

    In this regard, Brazilian Law No. 11,101\/2005\u2014governing judicial and out-of-court restructuring as well as bankruptcy\u2014plays a central role, directly impacting contractual relationships in the business environment. Its mechanisms extend beyond corporate restructuring, affecting the enforceability of obligations, notably through the suspension of enforcement actions, as well as the validity and effectiveness of previously executed legal transactions, including through clawback actions. As a result, creditors and contracting parties may find themselves temporarily prevented from enforcing their rights or subject to the review of acts carried out prior to the financial crisis. <\/p>

    Accordingly, counterparty analysis\u2014particularly from a financial health and market positioning perspective\u2014must be accompanied by the proper structuring of contractual safeguards capable of mitigating risks associated with potential economic deterioration. The establishment of collateral or personal guarantees, as well as protective mechanisms such as acceleration clauses, financial covenants, and obligations to reinforce guarantees, plays a central role in the proper allocation of risks, especially in unstable scenarios. In other words, formal legal certainty alone is not sufficient; transactions must be structured to ensure their practical enforceability, even in adverse conditions. <\/p>

    In this context, due diligence is no longer a secondary procedure, but rather a core element of governance and risk management. More than identifying the counterparty, it is essential to fully understand its legal, economic, and financial condition, as well as to structure the transaction in a way that can withstand potential crisis scenarios. <\/p>

    In an increasingly dynamic business environment, marked by frequent restructurings, prevention remains the most effective strategy. Investing time and resources in upfront analysis and risk mitigation not only reduces the likelihood of disputes, but also protects the overall effectiveness of transactions, including against potential challenges under insolvency laws.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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    \n\t\t\t\tThis content is provided for informational purposes only and does not constitute legal advice. The application of this information depends on the analysis of each specific case. \t\t\t<\/p>\n\t\t\t\t\t<\/blockquote>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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    By Eduardo Salles and Jo\u00e3o Pedro Zaidel Recent out-of-court restructuring filings by major Brazilian companies, such as Grupo P\u00e3o de A\u00e7\u00facar and Ra\u00edzen, have reignited an important concern in the business environment: the need for thorough counterparty due diligence prior to entering into legal transactions. More than a contractual review, this process requires a deep…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[538],"tags":[1554,1556,1557,1555,1551,1552,1550,1553],"area":[533],"class_list":["post-1007186","post","type-post","status-publish","format-standard","hentry","category-articles","tag-brazilian-bankruptcy-and-restructuring-law","tag-companys-financial-health","tag-contractual-guarantees","tag-contractual-risk-mitigation","tag-counterparty-due-diligence","tag-counterparty-risk-assessment","tag-due-diligence","tag-out-of-court-restructuring","area-corporate-and-ma"],"acf":[],"yoast_head":"\nA Wake-up Call on the Need for Due Diligence and Counterparty Risk Assessment - SouzaOkawa<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/souzaokawa.com.br\/en\/a-wake-up-call-on-the-need-for-due-diligence-and-counterparty-risk-assessment\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A Wake-up Call on the Need for Due Diligence and Counterparty Risk Assessment - SouzaOkawa\" \/>\n<meta property=\"og:description\" content=\"By Eduardo Salles and Jo\u00e3o Pedro Zaidel Recent out-of-court restructuring filings by major Brazilian companies, such as Grupo P\u00e3o de A\u00e7\u00facar and Ra\u00edzen, have reignited an important concern in the business environment: the need for thorough counterparty due diligence prior to entering into legal transactions. 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