Fabiana Cristina de Arruda Cueva Soares
Lawyer at Marcos Martins Advogados
The Judicial Reorganization and Bankruptcy Law – Law 11.101/2005 is guided by the Principles of the Preservation of the Company, the Separation of the Concept of Company and Entrepreneur, the Recovery of Recoverable Companies, the Protection of Workers and the Active Participation of Creditors, whose main objective is the viability and overcoming of the company’s economic and financial crisis.
Faced with a current scenario of serious economic and political crisis, the demand for Judicial Recovery grew by 62% compared to 2015. [i]
In the course of the process, the company requesting the legal benefit of Judicial Recovery must present its Recovery Plan, in which it will propose to its creditors a viable economic solution for the recovery of its activity, as well as the satisfaction of its credits.
If there are any objections to the reorganization plan presented, a General Meeting of Creditors is called, in accordance with article 35[ii] of the law, for the purpose of deliberating and approving or rejecting the plan.
Much has been argued about the prevalence of the resolution of the Meeting. However, the majority view of the courts is that the decision of the conclave, as long as it is carried out in accordance with the law, is sovereign.
There is therefore a debate about the competence of the Judiciary to partially or not annul the conditions of the reorganization plan approved by the Meeting and it is concluded that such an analysis would be restricted to the legal and formal aspects of the plan, in order to rule out any defects, fraud or abuse of rights.
However, in practice, this differentiation criterion can lead to different interpretations as to which aspects are exclusively the responsibility of the Meeting and are therefore part of the financial and economic conditions that underpin the merits of the reorganization plan, and which aspects are of a legal nature and subject to the scrutiny of the Judiciary.
It is not uncommon for the Judiciary, even after the Plan has been approved by the Meeting, which presupposes a careful analysis of the conditions by the creditors, through studies, suggestions for the company’s recovery and ample debate, to invade the field of merit, by annulling clauses that are often pillars for the implementation of the Recovery Plan and its economic viability
The fine line that delimits this analysis has made judicial decisions increasingly subjective, leading to legal uncertainty.
There is a consensus that the reorganization plan is of a business nature and in view of this peculiarity, the country’s courts have taken a variety of positions, with the STJ having already defined that the General Meeting of Creditors is sovereign in its decisions regarding RJ plans. However, resolutions on this plan are subject to the viability requirements for legal acts in general. [iii]
In the judgment of REsp 1.359.311-SP, reported by Justice Luís Felipe Salomão, the discussion was summarized by concluding that it is only the creditors who are responsible for analyzing the economic viability of the company, under penalty of emptying the institute and losing its most original innovation: the possibility of preserving the company, through an agreement with the majority of creditors subject to the procedure, despite the dissenting minority, thus refusing the interference of the Judiciary in the content of the reorganization plan.
The São Paulo Court of Appeals has rulings that support the negotiated nature of the reorganization, including emphasizing the magistrate’s care when analyzing what is merit or what is a legal defect. In the exact terms of the rapporteur, Hamid Bdine, of the 1st Chamber of Business Law:
“the insufficiency of the measures adopted by the aggravated parties to overcome the financial crisis is a matter for the exclusive examination of the creditors, and it is not for the Judiciary to verify their viability if there is no direct offense to constitutional and infra-constitutional norms, nor to contractual and business principles of public order.” [iv]
Other courts in the country, such as the Court of Justice of Mato Grosso do Sul, have also noticed the subjectivity of the decision, and are concerned with preserving what was decided at the conclave. As the vote of the rapporteur Vilson Bertelli correctly states:
“there is no way for the Judiciary to analyze the merits of the judicial reorganization plan approved by the quorums provided for in article 45 of the LRJF in order to state that the late payment charges, guarantees and grace or payment periods are abusive. The decision of the general meeting is sovereign, and the judge’s examination is restricted to aspects of strict legality.”[v]
Faced with the challenges inherent in the reorganization process, Marcos Martins Advogados is prepared to supervise the drafting of the reorganization plan, in order to guarantee its validation by the judiciary in achieving the effective overcoming of the crisis, combating the exercise of the so-called “economic magistracy”.
[i] Article published in the O Globo newspaper. Ana Paula Ribeiro. Date 25.10.16
[ii] Article 35. The General Meeting of Creditors shall be responsible for deciding on: I – in Judicial Reorganization: a) approval, rejection or modification of the judicial reorganization plan presented by the debtor.
[iii] REsp 1.314209/SP, DJE 01/06/12, 3rd Panel, Justice Nancy Andrighi
[iv] Interlocutory Appeal 2077207-85.2016.8.26.0000, 1st Chamber of Business Law, Americana – Rapporteur Hamid Bdine, Judged on 10.08.16
[v] Interlocutory Appeal 4011030-03.2013.8.12.0000, 2nd Civil Chamber, Dourados – Rapporteur Vilson Bertelli, Judged on 01.04.2014
