Nathália Guedes Brum
Lawyer at Marcos Martins Advogados Associados
Law No. 11.101, of February 9, 2005 (Bankruptcy and Reorganization Law – LFR), extinguished the concordatas and introduced into the national legal system the judicial reorganization of the individual entrepreneur and the business company in crisis, which have been regularly operating the economic activity for more than two years.
Under the terms of article 47 of this law, the purpose of Judicial Recovery is to make it possible to overcome the debtor’s economic and financial crisis, in order to maintain the source of production, the employment of workers and the interests of creditors, thus promoting the preservation of the company, its social function and the stimulation of economic activity.
The entrepreneur or company in crisis must file a request for Judicial Reorganization with the Judiciary, accompanied by all the documentation required by article 51 of the LRF, including a list of all the lawsuits to which it is a party, including those of a labor nature, with an estimate of the respective amounts.
Although Law 11.101/2005 does not deal with the possibility of an active joint venture in the Judicial Recovery process, there are jurisprudential and doctrinal understandings favorable to the issue, as long as they constitute an economic group. According to Ricardo Brito Costa:
The formation of an active joint venture in judicial reorganization, despite the absence of a provision in Law 11.101/2005, is possible in the case of companies that are part of the same economic group (de facto or de jure). In this case, even if there are companies in the group with operations concentrated in different courts, the expanded concept of ‘company’ (which should reflect the current stage of capitalism by including the ‘economic group’), for the purposes of Law 11.101/2005, makes it possible to establish the jurisdiction of the court where the main unit (establishment) of the group of companies is located. The active joint venture, formed by the companies that make up the economic group, does not violate the system of Law 11.101/2005 and complies with the basic Principle of the Preservation of the Company. The structuring of the reorganization plan, however, must be carefully considered so that creditors’ rights are not violated (COSTA, 2009, p. 182).
As soon as the court approves the processing of the judicial reorganization, all actions and executions against the debtor are suspended for a period of 180 (one hundred and eighty) days, with the exception of actions relating to illiquid amounts; labor claims before the labor courts until the respective amounts are determined; tax claims; claims of the fiduciary owner of movable or immovable property, of a lessor, of the owner or promissory seller of real estate whose contract is irrevocable or irreversible, or of the owner in a sale contract with reservation of title and of advances on foreign exchange contracts.
Once the request has been granted, the judge will appoint a trustee, who must be a suitable professional, preferably a lawyer, economist, business administrator or accountant, or a specialized legal entity, who acts as an intermediary between the debtor, the creditors and the courts.
After publication of the order granting the judicial reorganization, the debtor has a non-extendable period of 60 (sixty) days to submit the reorganization plan to the courts, under penalty of being converted into bankruptcy.
In the plan, the debtor will present the means that will be used to overcome the crisis. Article 50 of the LRF provides examples of the means used for judicial reorganization, including the granting of special terms and conditions for payment of overdue or maturing obligations, an increase in share capital, partial sale of assets, among others.
All holders of credits existing on the date of the request for judicial reorganization, whether due or not, are subject to judicial reorganization, with the exception of those specially provided for by law.
With the exception of labor debts, for which the maximum period for payment is one (1) year, in judicial reorganization there is no legal limit for extending the payment of the debts of other creditors.
The judicial reorganization plan is submitted to the creditors for approval and, if any creditor objects, the judge will call a General Meeting of Creditors to decide on the reorganization plan. At the meeting, the creditors may present changes to the plan, provided that the debtor expressly agrees. Rejection of the plan implies a legal decision to convert the judicial reorganization into bankruptcy. Once the plan has been approved and the debtor has complied with the requirements to present negative tax certificates, the judge will grant the judicial reorganization.
As established in article 64 of Law 11.101/2005, during the judicial reorganization procedure, the debtor or its managers will be kept in charge of the business activity, under the supervision of the Committee, if any, and the judicial administrator.
Thus, it can be concluded that the possibility of judicial reorganization of entrepreneurs and companies, since the enactment of Law 11.101/2005, has expanded the negotiating power of debtors and creditors to compose their interests, which contributes positively to the preservation of companies in economic and financial difficulty.
REFERENCES
BRAZIL. Law 11.101 – Bankruptcy Law (2005).
COSTA, Ricardo Brito. Judicial reorganization: is active joint litigation possible? In: Revista do Advogado – Judicial reorganization: controversial themes. Year XXIX. São Paulo: AASP, n. 105, Sep, 2009.
CREPALDI, Silvio Aparecido. Judicial and extrajudicial reorganization and bankruptcy of businessmen and companies: an analytical approach. Rio Grande: Âmbito Jurídico, 2008. Available at: http://ambitojuridico.com.br/site/index.php?n_link=revista_artigos_leitura&artigo_id=2774
