Positive Aspects of the Current Brazilian Insolvency System and the Figure of the Trustee Committed to the Results of the Process

Alexandre Borges Leite, Daniel Carnio Costa, Frederico A. O. de Rezende

Abstract

[abstract]This study seeks to demonstrate the evolution of the Brazilian insolvency system after the effectiveness of Law 11.101/2005, inspired by the North American Law, which brought the figure of the trustee, auxiliary body of the court, as inspector, facilitator, driver, responsible for the good interface between debtor and creditor and, mainly, by the achievement of the social and economic benefits protected by the special legislation.

The World Bank’s “Doing Business” statistical reports show that after the advent of the new legislation (Law 11.101/2005), the rate of recovery of credits in Brazil made a significant leap from a negligible 0.02% for each dollar to 25.80% in 2015, the highest percentage reached by the country, with a reduction in 2016, 2017 and 2018 (22.40%, 15,80% and 12,70%), as the severe crisis in Brazil over the last three years has meant that numbers lost strength.

In the recently presented World Bank “Doing Business” report, Brazil is in 80th position among countries in terms of insolvency resolution, reaching a percentage of 47,46%, with an average term for creditors to recover their 4-year credits. 

The same work points out some of the difficulties of the Brazilian system, among which is that of starting a business (bureaucracy), in which Brazil qualifies in position no. 176 and, in 184st, when assessing the imputed taxes, in relation to the others countries (out of 190 countries analyzed).

Such introduction is necessary only to demonstrate the distance of the Brazilian economy and its insolvency system in relation to developed countries, especially the United States of America, against which the current Brazilian insolvency law was inspired.

In the resolution ranking of “Doing Business” insolvency proceedings, the United States is in 3th position, only behind countries like Japan and Finland, followed by Germany and South Korea, with a credit recovery rate of 82,10% in relation to every dollar borrowed, an average time for lenders to recover their 1 year-loans. 

Notwithstanding Brazil’s modest performance against the 190 other world economies analyzed, a reasonable improvement has been observed in the aforementioned ranking after the effectiveness of the current insolvency legislation, which sought to ensure greater effectiveness and transparency for both the corporate reorganization process (Judicial Reorganization), and for bankruptcy, the one in which the assets of the company are collected and settled to pay the remaining liabilities.

Full Text:

PDF HTML

Refbacks

  • There are currently no refbacks.