Thyago Rodrigo da Cruz
Lawyer at Marcos Martins Advogados
As is well known, article 35, item I, paragraph “a”, of Law 11.101/2005 states that in judicial reorganization, the General Meeting of Creditors, among others, is responsible for deliberating on “approval, rejection or modification of the judicial reorganization plan presented by the debtor”.
In the context of this conclave, we understand that an abstention vote should be interpreted as the creditor’s silence regarding the approval, modification or rejection of the judicial reorganization plan, i.e. for the creditor in question, it doesn’t matter whether it is approved or rejected. So much so that, although they can express their will as to whether they agree or disagree, they choose simply not to take a position.
The situation in question gives rise to the supplementary application of the provisions of article 111 of the Civil Code, insofar as, according to its wording, “silence is consent, when circumstances or usage authorize it, and an express declaration of will is not necessary”.
With regard to the aforementioned legal provision, Ana Lucia Porto de Barros’ magisterium is worth mentioning:
The legislator intended, with regard to silence, that if the form of the act does not require its express manifestation in order for it to be valid, it should produce the effects of acceptance, but it must be accompanied by other circumstances or conditions in order for it to be fully effective. In any case, the judge must examine the circumstances from a “social and psychological perspective”[1].
For his part, Renan Lotufo, when dealing with silence as a form of expression of will, is extremely clear when analyzing its effectiveness in relation to legal transactions:
For silence to be admitted as an expression of will, that is, to have a meaning recognized by the Law, such recognition must be in accordance with the customs, practices and agreements of the place.
The efficacy of silence in the legal transaction referred to here is positive, which can be set against the preclusive efficacy (with no temporal condition to perform the act) of failure to comply with an obligation of initiative, specified by law, as in the situation of default (situation of the defendant who does not defend himself) in the process, for example, which may even be considered as confession (acknowledgment of what was alleged by the adverse party). In this case, the law establishes an onus which, if not met, can create an uncomfortable situation for the party in the case. This is totally different from the situation of those who receive an offer and remain silent, when they have a duty to express their opinion on whether or not to accept it, as provided for in Article 512 of the Code.
There are situations in which silence is eloquent, as it reveals acceptance of a certain legal effect, as Larenz says.[2]
Finally, Maria Helena Diniz, in her comments on the legal provision in question, states that:
Silence may, exceptionally, give rise to a legal transaction, since it indicates consent, being able to produce legal effects, when certain circumstances or uses authorize it, and the express manifestation of the will is not necessary. Otherwise, silence does not have the force of a volitional declaration. If this is the case, the court must ascertain whether or not the silence reflects a will. Therefore, the saying “he who remains silent consents” has no legal force. Pure silence will only have legal value if the law determines it, or if it is accompanied by certain circumstances or local customs that indicate the possibility of expressing a will, and provided that an express form is not essential for the negotiation to take place.[3] The court will have to determine whether or not silence reflects a will.
It is important to point out that not only the doctrine, but both the Reserved Chambers of Business Law of the São Paulo State Court of Justice have a more than consolidated understanding that the judicial reorganization plan is subject to the legal regime of legal transactions. Let’s see:
Ementa: JUDICIAL RECOVERY. Decision approving the Judicial Reorganization Plan through the cram down mechanism, which does not make it immune to verification by the Judiciary on aspects of its legality and compliance with cogent principles that illuminate contract law. Absence of abuse or violation of a legal rule that would lead to the annulment of the entire plan. Final result of the discount, time, update factor and interest vectors, in the specific case, does not imply unreasonable sacrifice to creditors and rules out the possibility of annulment. Extinction of previous guarantees. Null clause. Art. 49, § 1, and art. 59, caput, both of the LRF. Precedent no. 61 of this Court. Creation of an unlawful obstacle to the enforcement of guarantees against jointly and severally liable parties. Lack of jurisdiction of the Judicial Reorganization Court to extend the effects of the moratorium to guarantors or co-debtors. Ineffectiveness of clause extending novation to co-obligors. Frontal violation of the text of the law and of the case law of the Reserved Chambers of Business Law and of the Superior Court of Justice. Only a null and void clause is removed, without the need to annul the entire plan and submit it to a new decision by the Meeting of Creditors, in honor of the principle of preserving legal transactions. Appeal partially granted. (TJSP, 1st Chamber Reserved for Business Law, Interlocutory Appeal No. 2238084-96.2016.8.26.0000, Judge Francisco Loureiro, j. 19/05/2017)
Summary: VOTE No. 14413. JUDICIAL REORGANIZATION PLAN. CONTROL OF LEGALITY. Granting of judicial reorganization based on cram down. Admissibility. Requirements of article 58, § 1, items I to III, of Law 11.101/05 met. Absence of unjustified differential treatment between creditors (pars conditio creditorum principle), nor illegality or affront to the system of validity of legal transactions. Appeal not upheld on this point. FORM OF PAYMENT. Discount, grace period and extended payment period. Admissibility. Absence of illegality and/or abuse. Effectuation of the principles of preservation of the company and its social function (article 47 of Law 11.101/05). Liquidity of the installments, according to the clause in the plan and the payment flow statement. Appeal not upheld on this point. INTEREST AND MONETARY CORRECTION. Not applicable. Form of discount. No illegality. Creditors who approved the plan by a large majority. Sovereignty of the general meeting of creditors. Appeal not upheld on this point. REAL AND FIDUCIARY GUARANTEES. Appellant who voted not to approve the plan. Express reservation as to the release of in rem or personal guarantees of credits prior to the request for reorganization. Precedent No. 61 of this Court. Precedents of this C. Chamber. Clause declared ineffective in relation to the Appellant. Appeal upheld on this point. Appeal partially granted. (g.n.) (TJSP, 2nd Chamber Reserved for Business Law, Interlocutory Appeal No. 2080418-03.2014.8.26.0000, Judge Tasso Duarte de Melo, j. 03/02/2015)
So much so that article 59 of Law 11.101/2005 is very clear in stating that “the judicial reorganization plan implies novation of the credits prior to the request, and binds the debtor and all creditors subject to it, without prejudice to the guarantees, subject to the provisions of paragraph 1 of article 50 of this Law”, giving rise to the so-called novative legal transaction.
It is clear that, since the judicial reorganization plan is a multi-subject legal transaction, the provisions of article 111 of the Civil Code will apply to it in order to consider the silence contained in the abstention vote as favorable to its approval, an interpretation that stems from article 11.101/2005[4] itself, which establishes the principles of preservation of the company and its social function as the cornerstone of judicial reorganization.
In this respect, it should not be forgotten that the illustrious judge Alexandre Alves Lazzarini, in a scientific article of his own in which he discusses the consideration of a vote of abstention as favorable to the judicial reorganization plan, has already expressed this view for a long time. Let’s see:
[…] In the light of the principles of article 47 of Law No. 11.101/05, especially that of preserving the company in order to fulfill its social function, the abstention vote should in fact be interpreted in a positive sense to approve the plan.
Let’s clarify:
In a vote, the creditor is given the choice of approving or rejecting the plan. If the creditor chooses to abstain, he is in fact expressing a desire to be indifferent (or in common parlance ‘whatever’) to the fate of the company under reorganization.
Now, article 47, reinforced by article 58, §1, in addition to being principles, is also rules of interpretation. In other words, if those who abstain are indifferent to the outcome of the General Meeting of Creditors, the principle of preserving the company must prevail, i.e. abstention is always counted in the positive sense of the company’s approval. […]
Abstention, as noted, has two meanings, in the affirmative sense (approval) it has the effect of preserving the company and its social function (maintaining employment, for example) and, consequently, the real possibility of creditors receiving at least part of their credit; in the negative sense (rejection) it will have no effect at all, as there will be no company, no employment and it will be difficult for creditors to receive any of their credit.[5] (g.n.)
Thus, it seems to us that the vote of abstention carried out by a creditor qualified to vote at the General Meeting of Creditors to be held to decide on the approval, modification or rejection of the judicial reorganization plan, should be understood as favorable to it, in honor of the principle of preservation of the company, the mainstay of Law 11.101/2005.
[1] BARROS, Ana Lucia Porto de et al. O novo código civil: comentado. Rio de Janeiro: Freitas Bastos, 2002, v. 1, p. 75.
[2] LOTUFO, Renan. Commented civil code: general part (arts. 1 to 232). 2. ed. current. São Paulo: Saraiva, 2004, p. 291-292.
[3] DINIZ, Maria Helena. Annotated Civil Code. 15. ed. rev. and updated. São Paulo: Saraiva, 2010, p. 154-155.
[Art. 47: The purpose of judicial reorganization 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.
[5] LAZZARINI, Alexandre Alves. Reflections on the judicial recovery of companies. In: DE LUCCA, Newton; DOMINGUES, Alessandra de Azevedo (coords.). Recovery Law – Theoretical and practical aspects. São Paulo: Quartier Latin. 2009. p. 132.
