Due to Covid-19, a company in Judicial Recovery has had its obligations suspended for four months

Amanda Couto
Trainee at Marcos Martins Advogados

A large industrial company in the interior of São Paulo, which is undergoing Judicial Recovery, was successful in its request to suspend payment of obligations due to the serious crisis faced by the sector in which it operates, aggravated especially by the advent of COVID-19.

In the request, the company claimed that as a result of the crisis caused by the pandemic, hundreds of purchase orders were canceled, as well as payment postponements, which had an economic impact on the company’s activities.

When analyzing the case, the judge ruled that “there is a clear economic and financial imbalance, since the factual basis that led to the agreement of wills has been altered, since the cash flow has suffered a drastic drop of practically 100% in recent weeks. And this imbalance resulted from an unforeseeable, unavoidable event that was not caused by any of the parties involved in the legal relationship (the judicial reorganization plan).”

In his decision, the judge emphasized that the company is in regular compliance with the Plan, and that the main objective of the Judicial Reorganization is to preserve the company and that maintaining the Plan, as originally agreed, puts at risk the preservation of the source of production, which generates jobs and revenue for the state.

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