Welcome to Management in Focus, the monthly newsletter from Galeazzi & Associados. Every last Monday of each month, you receive exclusive analyses, topics to keep an eye on, and insights from Galeazzi & Associados on what's shaping the market and business landscape. Our goal is to enhance your planning and decision-making with insights and perspectives from our professionals.

We continue to closely monitor the movements that various sectors of the economy have undertaken to ensure austerity in governance and cost control, especially in the face of external signals (such as the decline in economic growth in many nations, inflation issues, and the challenge of restoring price stability) and the macroeconomic initiatives driven by the government to boost consumption and attract investments.

However, we cannot ignore the results of the first semester for Brazilian companies. The number of judicial recoveries in the country reached the highest volume in three years, totaling 593 requests in the first six months of 2023. Compared to the same period last year, there was an increase of 52.1%. Established corporations such as Americanas, Oi, Grupo Petrópolis, and Light are examples of companies facing billion-dollar debts that had to resort to this tool.

As one of Galeazzi's core activities, we understand that these numbers may remain high for the rest of the year, as many companies are finally conducting a thorough review of their structures and realizing that there is much to be corrected. Between filing for bankruptcy and signaling judicial recovery, it is common for entrepreneurs to choose the latter option. However, we have increasingly noticed that this resolution has been drawn out over years and is taken at a nearly irreversible stage.

It's not just poor management or macroeconomic aspects that affect business health. The Brazilian environment still grapples with an increase in the country's legal uncertainty, causing uncertainties for managers, even when they know that change management is inevitable. The moment calls for leaders to seriously look inward, examine their indebtedness, evaluate sales and inventory, identify logistical bottlenecks, and be sensitive to why the culture is unsustainable and the turnaround grows with each new quarter. This wave of judicial recovery is not expected to experience a significant decline in the coming months, and it is the duty of those steering the ship to ensure the overcoming of turbulence with awareness and sustainability.

Until next month!