By Maria Eduarda X. Soares and Heloísa Nogueira
The debate over who can (or cannot) access legal mechanisms for corporate reorganization has taken on new dimensions in recent days following the reaction to a specific case: a judge in the capital of Goiás had his petition for judicial reorganization (*Recuperação Judicial*) rejected by the courts. This episode sheds light on the expansion of parallel business activities by public officials—and the ethical and constitutional boundaries this raises—an issue that has been quietly gaining traction.
The story begins when a magistrate from the state capital—who also engaged in agricultural activities—filed for judicial reorganization. He claimed to be facing financial difficulties typical of the agribusiness sector, driven by price volatility, adverse weather conditions, and high operating costs—challenges well known to Brazilian rural producers.
Yet, the obstacle lay neither in the stated reasons nor in the figures presented. It lay in the applicant's professional identity.
From that point on, the proceedings shifted from a mere request for restructuring to a debate regarding institutional compatibility. This is because the Organic Law of the National Magistracy (LOMAN) prohibits magistrates from engaging in business activities—specifically to avoid conflicts of interest, financial risks that could compromise their independence, and any commercial involvement that might call into question the imperative of impartiality inherent to their role.
The sensitivity of the matter is underscored by the fact that, in this specific case, before the matter reached the court in Piranhas, three magistrates from different judicial districts had recused themselves from hearing the case based on personal grounds (*foro íntimo*).
At the same time, as is well known, Judicial Reorganization is a legal mechanism designed for business entities, businesspeople, or rural producers who have opted for legal equivalence to a businessperson—thereby assuming the commercial obligations typical of that status.
However, the plaintiffs based their request on the argument that there is no legal impediment preventing magistrates or public servants—acting as individual rural producers—from filing for judicial reorganization, given that they would not be engaging in trade or participating in a business entity, and thus would not be performing acts of a business nature.
They further argued that rural activity carried out by an individual is distinct from a business enterprise and that the Judicial Reorganization and Bankruptcy Law itself allows rural producers to file for judicial reorganization without the need to incorporate as a legal entity. In other words, it is entirely possible to be a rural producer and operate the activity as a source of family income without crossing the line into the type of business activity prohibited for their respective offices.
However, according to the understanding of the presiding judge, Dr. Renato Prado da Silva, to gain access to judicial reorganization proceedings, a rural producer must demonstrate that they engage in business activity—meaning they can enter into high-risk contracts and incur substantial commercial debts and obligations—which characterizes precisely the type of activity prohibited by LOMAN (the Organic Law of the National Magistracy).
Income tax returns and real estate property records indicated that the vast majority of assets, debts, and credits linked to the rural activity were held in the magistrate's name, as were lease agreements, pledge agreements, bank credit notes, and rural credit notes secured by pledges and mortgages.
These elements demonstrated that the rural enterprise was effectively managed by the judge, a situation incompatible with both the full-time dedication required of the judiciary and the legal status of a public servant.
Furthermore, it is worth noting that granting magistrates permission to access judicial reorganization proceedings—participating in negotiations with banks, creditors, and suppliers, signing payment plans, and renegotiating debts, all while that same professional group adjudicates judicial reorganization cases on a daily basis—would set highly sensitive precedents due to the serious risk of ethical conflicts.
Ultimately, considering the legal prohibition against magistrates and public servants engaging in business activities, as well as the failure to meet the requirements set forth in the LRF (Judicial Reorganization and Bankruptcy Law), the Court denied the processing of the request and dismissed the case without a ruling on the merits, pursuant to Article 485, VI, of the Code of Civil Procedure.
And you, the reader—what is your opinion on this topic? At a time when the limits of legal entities, economic agents, and economic viability within a digital capitalist system are being debated, is it reasonable to demand that a judge remain solely a judge, or should the principle of equality before the law be prioritized?
