Judicial Restructuring in Brazil – Credits not subject to the proceeding

Resumen

[extract] In Brazil, Federal Law 11,101/2005, known as the Brazilian Bankruptcy and Restructuring Law (“BRL”), came into effect on June 9, 2005, bringing significant changes to the legal treatment of Brazilian companies that are insolvent or facing financial difficulties. BRL applies to entrepreneurs and business companies in general. It does not apply to state-owned companies, mixed capital companies, financial institutions, insurance companies, and some other entities expressly excluded by the law, which are subject to specific insolvency proceedings. BRL establishes three major mechanisms that may apply to companies in difficulties: judicial restructuring, out-of-court restructuring and forced liquidation. As one of its main features, the BRL offers the debtor company an opportunity for rehabilitation and, in most cases, continuity of management.