Legal Uncertainty on Financing Distress Companies Refinancing in Brazil

Luiz Eduardo Trindade Leite

Abstract

[extract] This paper has as its goal to understand and analyze the difficulties faced by corporations to acquire refinancing and investments, during legal reorganization. With focus on bank operations, the conflicts established in the superior courts in surveying the operations commonly formalized by financial institutions, which adds as warranties the so-called “receivables”, to approach the due cares needed in these kinds of contracts. From this premise, it will be acknowledged the discussion regarding credits whether they must or not be subjected to legal reorganization; therefore, it was observed the approach given by the Courts to the so-called bank locks (travas bancárias). The new Bankruptcy and Legal Reorganization Act now completes 12 years in times of crises and instability, thus asking for new reflections aiming the social equilibria and legal certainty. The legal certainty always was regarded as indispensable in the view of the investors and financial institutions that seek tirelessly for the certainty of deals and facts around the risks of the business. By trying to ensure the certainty in its relations, the Law Lei 11.101/05 has brought a very fragile protection and many doubts about the potential investors and financial institutions who believe that the corporation facing financial distress can be restructured. Adding to that, the Resolutions/ Resoluções n°1.559/88 and n° 2.682/99 of the National Monetary Council/ Conselho Monetário Nacional deter in practice the development of the DIP Financing in Brazil.

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