International Journal of Insolvency Law

Manual of Good Practices for Judicial Reorganization

Daniel Carnio Costa, Alexandre Nasser de Melo — Mon, 18 Feb 2019 00:00:00 +0100

This article has the aspiration to analyze the best possible practices in Judicial Reorganization of all agents involved, being them the Judge, the Judicial Administrator or Lawyers.

In addition, it will also make a thorough investigation on the reflexes of conjoined activities of these professionals under the scope of Judicial Reorganization.

In that manner, it is necessary to conceptualize the obligations, powers and duties of all those agents that integrate insolvency litigations, including third parties who might have interests in the dispute.

It is also an objective of this study to demonstrate the numerous procedures difficulties found in the unravel of litigations, as well as to propose ways to facilitate the conjoined activity of the Judicial Administrator, Judges, creditors and companies in Reorganization, that allows the resolution of such issues in an agile and effective manner, steering the Judicial Reorganization to a success or to a swift award of bankruptcy at the appropriate time, avoiding social costs.

Previous Examination - An Analysis of its Applicability

Mon, 18 Feb 2019 00:00:00 +0100

The objective of this article is to demonstrate, besides the phatic crisis of the Brazilian economy, the function, the applicability and limits to the power conceived by Law to the Judge when designating the Previous Examination on the proceedings of Judicial Reorganization and also to demonstrate the influences that this may cause in its factual and legal aspects.

Before entering the practical aspects of the Previous Examination, it is necessary a brief contextualisation about the economic crisis in Brazil and also an analysis of the Judicial Reorganization as a mechanism to overcome the economic and financial crises which are affecting Brazilian Companies.

Using a historical and legal background, this article analyzes practical aspects of the Previous Examination and its effectiveness in improving the proceedings by verifying the empirical data when deciding whether to rule in favor of the Judicial Reorganization.

Cram down and the Abusive Exercise of the Right to Vote by the Creditor: an Analysis of the Legislator’s Democratic Intents and Recent Jurisprudence in Brazilian Courts

Aguinaldo Ribeiro Jr, Jéssica Malucelli Barbosa — Mon, 18 Feb 2019 00:00:00 +0100

This article aims at analyzing the democratic exercise of voting by creditors and its implication both in the result of the assembly and in the approval of the debtor’s judicial reorganization, according to the ordinary and extraordinary procedures of the Brazilian Bankruptcy and Judicial Reorganization Law (Law 11.101/2005). To that end, the main principles of the Brazilian reorganization system will be presented, as well as the cases that allow for judicial reorganization as expressly provided for in the law and their practical aspects. The article will also indicate the inclination and application of the possibilities of approval of a judicial reorganization by the Judiciary in face of the non-acceptance of the plan through ordinary voting, by instruments such as cram down and abusive exercise of the right to vote. Finally, it will address modern doctrines that have been accepted before Brazilian Courts, with comments based on the author’s practical experiences.

Procedural Legal Transactions in Judicial Reorganization

Giovanna Vieira Portugal Macedo — Mon, 18 Feb 2019 00:00:00 +0100

[extract] On March, 2016, Law 13.105 / 2015, the so-called “New Code of Civil Procedure” came into force in Brazil, with the purpose of promoting a speedier, fairer, and more effective procedure, aiming to attend to social needs with the reduction of the “complexity” of procedural rules.

The simplification of the procedure itself, therefore, allows the judge to pay more attention to the merits of the cause, changing the mentality of the Brazilian jurist, so that he gives attention mainly to the merits and effectiveness of the lawsuits.

The Innefficiency of the Current Judicial Reorganization Process of Companies in Brazil

Eduardo Coube de Carvalho — Mon, 18 Feb 2019 00:00:00 +0100

[extract] The perception that companies in financial difficulties need to be preserved on behalf of social welfare (jobs and stimulation to the economic activity), nearly generating a state obligation to guarantee their survival at any cost, has given rise to excesses.

The current legal device for judicial reorganization and bankruptcy (Law 11.101/2005) in force in Brazil enables maneuvers of companies which aim solely at having bankruptcy and execution claims against them suspended, taking advantage of the so-called stay period of 180 days. As an evidence of that, we cite the statistic of only 30% of concession of recoveries in view of the total of requests. That is, for every ten filings of judicial reorganizations, only three undergo the scrutiny of Article 58 of the Judicial Reorganization Law. The vast majority fails to present their reorganization plan or has the plan rejected by the creditors’ meeting.

On the other hand, it is seen that the corporate reorganization mechanism often does not allow for an effective processing of the reorganization plan, failing to encourage a healthy relationship between those involved and leading viable enterprises to bankruptcy. One cannot suppose that the creditors, just for being responsible for the plan approval, must necessarily do so consciously. Besides leaving little or no margin for the creditors to present alternative plans, bankruptcy is put as the immediate consequence of the non-approval at the meeting. In the first case, the creditors fail to suggest broad changes to the plan or lack the necessary information for an alternative. In the second situation, in turn, the creditor’s options are greatly reduced. Either he votes for the approval of any plan - even perceiving its evident inconsistency - or he will face the certain loss for the debtor’s bankruptcy (COELHO, 2018).