Judicial and out-of-court restructuring has become an important path for companies in crisis that can no longer service their debts as originally agreed. Brazil's Bankruptcy and Corporate Reorganization Law is intended to help businesses overcome economic and financial distress by providing appropriate mechanisms for recovery and allowing them the breathing room needed to remain competitive.
Nogueira Engel has a qualified team of experienced professionals ready to help your company face a crisis and develop new paths to preserve its business activities.
In times of crisis, restructuring should be a central focus for business owners. Analyzing and understanding the company's problems is a priority and may lead its partners to pursue judicial or out-of-court reorganization in order to preserve the business and keep it operating in the market.
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Creditors play a crucial role in judicial reorganization. Throughout the process, they assess whether the debtor company is genuinely able to continue operating. Once the judicial reorganization plan is published, each creditor must understand the provisions and payment terms proposed for its outstanding claim, including timing and any discount, and compare those terms with its own interests. At the General Meeting of Creditors, creditors vote on the reorganization plan and therefore play a decisive role in the proceeding.
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As a general rule, filing for judicial reorganization does not automatically terminate existing contracts, allowing the company to continue performing its social and economic role. However, Article 49 of Brazilian Law No. 11,101/2005 addresses claims existing as of the filing date, and some agreements may contain provisions dealing with termination following a reorganization filing by the debtor.
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As a rule, claims in judicial reorganization are not given individual payment privileges, in keeping with the principle of par conditio creditorum, meaning that creditors in the same legal position are treated equally and none receives an improper payment preference.
The law does establish payment deadlines for labor claims under Article 54 of the Bankruptcy and Corporate Reorganization Law. For other classes, however, it does not set a single deadline, so the debtor company and its creditors must agree on the most appropriate terms for settling outstanding claims.
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Article 54 of Brazilian Law No. 11,101/2005 establishes deadlines specifically for labor claims in judicial reorganization. For other classes—including secured creditors, unsecured creditors, and microenterprise or small-business creditors—the payment period, discount, interest adjustment, installments, and other payment terms must be negotiated.
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The most prudent step is to consult a lawyer experienced in judicial reorganization as soon as possible. Counsel should verify whether the creditor appears on the list of claims and whether the amount is correct. If the creditor is missing or the amount is inaccurate, the first step is generally to contact the court-appointed judicial administrator and seek administrative recognition or adjustment of the claim. If that is not possible, counsel may need to file the appropriate claim-recognition proceeding with the court.
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