Priscila das Neves Crusco
Lawyer at Marcos Martins Advogados
On August 28, 2015, an innovation was about to take place within the scope of Law 11.101/2005, since a successful story of a request for Judicial Recovery was born there, that of the Rural Producer, where José Pupin Agropecuária and Vera Lúcia Camargo Pupin were litigation partners, Armazéns Gerais Marabá Ltda, Marabá Agroindustrial e Nutrição Animal Ltda, JPupin Indústira de Óleos Ltda, JPupin Reflorestamento Ltda, Marabá Construções Ltda and Cotton Brasil Agricultura Ltda.
It is said that this was the cradle of novelty, since the court that received the request, in an unconservative manner, granted the request for Judicial Recovery of the J. Pupin Group, including the Rural Producers requesting the benefits of the law, on the grounds that “José and Vera Pupin had been individual rural entrepreneurs for decades” (sic), and that, from its point of view, the requirements of article 48 of Law 11.101/2005[1] had been met.
11.101/2005[1], which states:
Art. 48: A debtor may apply for judicial reorganization if, at the time of the application, the debtor has been regularly carrying on business for more than two (2) years (…).
This understanding was first blocked by the Mato Grosso Court of Justice, which, in the case of the interlocutory appeal filed by Banco Votorantim and endorsed by all the other creditor banks listed in those proceedings, whose contracts were entered into or guaranteed by the defendants José and Vera, determined that the rural entrepreneurs should be excluded, based on the argument that it was essential for them to have the status of entrepreneurs, that is, to have been registered with the competent body for the period required by law, which was not the case with the defendants, since their registrations with the Board of Trade were dated August 20, 2015 and August 24, 2015, respectively.
Thus, in case file no. 3067-12.2015.811.0051, still pending before the 1st Civil Court of Campo Verde, the companies Armazéns Gerais Marabá Ltda., Marabá Agroindustrial e Nutrição Animal Ltda., JPupin Indústria de Óleos Ltda., JPupin Reflorestamento Ltda., Marabá Construções Ltda. and Cotton Brasil Agricultura Ltda. remain in Judicial Recovery, excluding the rural producers.
Supported by the same interpretation of that Court, which excluded them from Judicial Recovery No. 3067-12.2015.811.0051, which was based solely on the issue of the timing of the registration of the Rural Producers with the Board of Trade, in September 2017, that is, more than two (2) years after their registration with the business regime, José Pupin Agropecuária and Vera Lúcia Camargo Pupin filed for their own Judicial Recovery, distributed to the 1st Civil Court of the District of Campo Verde, under No. 7612-57.2017.811.0051.
As a logical consequence of the cessation of the above-mentioned obstacle, on October 10, 2017, the Judicial Reorganization was granted, but not before the court had ordered a prior expert opinion on the documentation that accompanied the initial petition, which represents yet another innovation in the application of the Bankruptcy and Reorganization Law, which is still in force.
Once the processing was granted, a new battle began, as the creditors, most of whom were banks, began to question whether their claims were subject to the effects of the Judicial Recovery, because these obligations had been assumed by the Rural Producers before they were registered with the Board of Trade, i.e. when they did not yet have the status of “regular entrepreneur”.
It should be pointed out that the lower court, in its decision, applied the rule of article 49 of Law 11.101/2005[2] to all claims, regardless of the date of their constitution, as long as they existed on the date of distribution of the request for judicial reorganization, determining the exclusion only of claims recognized as extrajudicial under the terms of the same Law.
Once again, the creditors, dissatisfied with the above decision, resorted to legal means and, in a different way to the 1st degree magistrate, the Mato Grosso Court of Justice ruled, in the case of Interlocutory Appeal No. 1012637-90.2017.8.11.0000, that credits constituted before the registration of the Rural Producers with the Board of Trade were not subject to the effects of the Judicial Recovery.
As a result of the decision in that interlocutory appeal, Special Appeal No. 1.800. 032[3], in which the majority of the Justices, following the dissenting vote, granted the appeal, determining that all credits should be subject to the effects of the Judicial Recovery, even if they were entered into before the registration of the entrepreneurs, on the understanding that, in addition to being registered, the producers were already carrying out their activities in a regular manner, since registration for these entrepreneurs is optional, and its absence does not imply the possible irregular development of the activities previously practiced by the rural producers.
“In this way, the rural entrepreneur, whether registered or not, is always in a regular situation; there is no irregular situation for him, even if he carries out agricultural economic activity before his registration, as this is optional. Therefore, if they are engaged in the production of agricultural goods, whether they are registered or not, they will be in a regular situation, precisely because they could register or not. So what changes when a rural producer registers? Only the legal regime to which he will be bound: the regime of the Civil Code itself, while not registered; or the business regime, after registration.
This assertion was brilliantly outlined in the winning vote of the Eminent Minister Raul Araújo, and some excerpts from this important vote are worth transcribing:
Thus, the effects of registration are different for the two types of entrepreneur: those subject to registration and those not subject to registration. For the rural entrepreneur, registration, being optional, has the constitutive effect of equating him, for all intents and purposes, to the entrepreneur subject to registration, and this effect is capable of retroacting (ex tunc), since the regular condition of entrepreneur already existed even before registration. On the other hand, for the ordinary entrepreneur, registration, since it is compulsory, can only have prospective effects, ex nunc, since it is only with registration that they become regular and effectively, validly, an entrepreneur. (…)
Applying the above rule to rural producers, it is clear that, after obtaining registration and moving to the business regime, being entitled to differentiated, simplified and favored treatment with regard to registration and the effects arising from it (CC, arts. 970 and 971), they obtain a condition of eligibility to apply for judicial reorganization by simply proving, at the time of the reorganization application, that they have been regularly carrying out rural activities for more than two (2) years. Therefore, for the purposes of completing the more than two years required by law, he can count the period prior to registration, when he regularly carried out his rural activity under the Civil Code. It should be noted that, here, the regular exercise of his activities includes the computation of the period prior to registration, because, as we have seen, it was, even then, a regular exercise of the activity. (…)
After all, the aforementioned article 48 requires, as a condition for applying for judicial reorganization, only that the entrepreneur carries out his activity in a regular manner for a minimum period of more than 2 (two) years. And it so happens that, even without registration, even before registration, the rural producer, if he was an entrepreneur, was already regularly carrying out his professional activity organized for the production of goods and services, in other words, he was already a regular entrepreneur, albeit under the civil regime.
Moving on… As the rural entrepreneur, whose registration is optional, is always in good standing, even before registration, and is entitled to differentiated, simplified and favored treatment with regard to registration and the effects arising therefrom, it follows that, after the rural producer’s registration, the law does not distinguish between the legal regime applicable to obligations prior to or after the registration of the rural entrepreneur who files for judicial reorganization. When he files for judicial reorganization, those obligations and debts previously contracted by him and not yet paid are also covered”.
Thus, rural producers registered with the Board of Trade who can prove that they have been carrying out their activities for more than two (2) years can now benefit from a request for Judicial Recovery, the aim of which is to preserve the company, its social function and stimulate economic activity, subject to which are all the credits constituted before or after they became an entrepreneur, since they arose from the regular exercise of their activities.
And in a country where agribusiness is recognized as one of the vectors of economic growth, the importance of this decision is historic, and this precedent should be recognized as a powerful element in the resumption of growth.
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[1] BRAZIL. Law No. 11.101. Regulates the judicial reorganization, extrajudicial reorganization and bankruptcy of entrepreneurs and business companies. Available at: http://www.planalto.gov.br/ccivil_03/_ato2004-2006/2005/lei/l11101.htm. Accessed on: February 20, 2020.
[2] Art. 49: All claims existing on the date of the petition, even if not yet due, are subject to judicial reorganization.
[3] BRAZIL. Federal Supreme Court (2nd Panel). Special Appeal 1.800.032 – MT. Special Appeal. Civil and Business. Rural Entrepreneur and Judicial Recovery. Regularity of the rural activity prior to the entrepreneur’s registration (Civil Code, Arts. 966, 967, 968, 970 AND 971). Ex tunc effects of the rural producer’s registration. Application for judicial reorganization (Law 11.101/2005, art. 48). Calculation of the period of rural activity prior to registration. Possibility. Special appeal granted. Appellant: Jose Pupin Agropecuaria – In Judicial Recovery and Vera Lucia Camargo Pupin – In Judicial Recovery. Defendant: Banco do Brasil SA. Rapporteur: Justice Marco Buzzi, November 5, 2019. Available at: https://ww2.stj.jus.br/processo/revista/documento/mediado/?componente=ITA&sequencial=1832496&num_registro=201900504985&data=20200210&formato=PDF. Accessed on: February 20, 2020.
