The Group of Reserved Chambers of Business Law of the Court of Appeals of São Paulo approved two guidelines related to the deadlines in judicial reorganization procedures, on January 17, 2019.

The first guideline establishes that the one-year deadline for the payment of labor-related claims or occupational accident claims as set out in article 54, caput, of the Law n. 11,101/2005, must be counted from the judicial ratification of the reorganization plan or from the end of the stay period set forth in article 6, paragraph 4, regardless of its extension, whichever occurs first. The aim of this precedent is to settle opinion about the payment of these creditors. However, the end of the stay period usually occurs before the creditor’s approval and the judicial ratification of the reorganization plan, which would cause these creditors to be paid even before establishing the method by which this would occur. In addition, failure to approve the plan may lead to the bankruptcy of the debtor.

In its turn, the second guideline states that the two-year period of the judicial supervision provided in article 61, caput, of the Law n. 11,101/2005 starts after the end of the grace period. Considering the supervision period and the risk of conversion from the reorganization to bankruptcy in case of nonperformance of any obligation settled in the reorganization plan, the establishment of grace periods of more than two years became common in Brazil. Thus, the precedent stipulates that the debtor must comply with the plan during the two-year supervision period. This understanding was being consolidated by the Court of Appeals of São Paulo and now is settled with the publication of the referred text.

A preliminary injunction was granted in 19th December 2018 by the 2nd Chamber of Business Law of the Court of Appeals of the State of Santa Catarina (case n. 4031177-41.2018.8.24.0000) determining that compliance with the judicial recovery plan cannot be hindered by a condition imposed by the court.

The reorganization plan of debtors that are under judicial reorganization since 2016 was approved by the creditors’ meeting and ratified by the competent court – the 2nd Civil Court of the District of Caçador/SC. The reorganization plan provides the transfer of real estate in judicial sales for not less than 70% of the value determined in appraisal reports.

After expressing its concern about the lack of commitment of the debtors and the trustee with the fulfillment of the recovery plan, the judge decided that the sales could only occur after the payment of the labor-related creditors with claims under R$20.000,00. The decision was based on the fact that several creditors did not receive their payments because they did not indicate the bank accounts as specified in the reorganization plan (by e-mail or at the head office of the company).

Analyzing the suspensive effect motion in the interlocutory appeal, the Court of Appeal reversed the imposed condition. Aware of the notes of the lower court, the decision honored the principle of Sovereignty of the Decision of the Creditors. According to the Judge-Rapporteur, the condition is inappropriate because the law or the reorganization plan does not support it, and the courts must decide on the legality of the plan, without interfering in its negotiation aspects. Despite this, it was determined that the proceeds from the sale of the assets must be deposited in court in a sufficient amount to guarantee the payment of labor creditors holding claims up to R$ 20,000.00 until the trial on the merits.

In a unanimous decision, the 4th Panel of The Superior Court of Justice denied a Special Appeal (case n. 1.733.685/SP) whereby the appellant pleaded that the existence of an arbitration clause in the main contract affects the performance of the commercial paper (in this case, nonperforming duplicate invoices), in order to prevent the start of bankruptcy proceedings, based on article 94, I, of the Law n. 11,101/2005, especially considering the realization of deposit in court of the amount claimed in the bankruptcy petition, pursuant to the sole paragraph of article 98 of the same statute.

The Superior Court of Justice ruled that the deposit did not end the bankruptcy but converted it into a collection procedure, which must be executed by the courts. The enforceable nature of the execution proceedings prevents arbitration since the arbitrator does not have jurisdiction in execution that is why the collection procedure must be submitted to courts.

The 3rd Panel of The Superior Court of Justice held that Companies under judicial reorganization do not need judicial authorization to execute factoring contracts (case n. REsp 1.783.068/SP).

The litigation was about the classification of claims as part of the permanent asset. The Court of Appeals of São Paulo has ruled that the credits were classified as part of the permanent assets, thus, the sale of the claims should be approved by the courts after hearing the committee of creditors, pursuant to article 66 of the Law n. 11,101/2005.

Applying accounting concepts of the Law n. 6,404/76, The Superior Court of Justice reversed the judgment, and the 3rd Panel held that the claims derived from factoring operations are not part of the fixed assets. Therefore, the companies can dispose of it by a decision of the company’s management, without any other authorization. The Judge-Rapporteur also pointed out that these claims could be part of the current assets in long term and the sales of these assets could be an important source of funding.

In an unanimous decision, the 3rd Panel of The Superior Court of Justice (case n. REsp 1.700.700/SP) ruled that the reservation of the amount paid to the judicial administrator provided in article 24, § 2º, of the Law n. 11,101/2005 is applied only in bankruptcy proceedings. In the appealed judgment, the Court of Appeal of São Paulo fixed the compensation in 3% of the debts, preserving 40% of this amount to be paid at the end of the work of the trustee.

The Superior Court of Justice held that is not possible to retain the judicial administrator compensation in reorganization procedures. The reason is that this reservation is conditioned to the accountability and the submission of the final report provided in articles 154 and 155 of the Law n. 11,101/2005, specific to the end of the lawsuit.

According to Judge Paulo Furtado de Oliveira Filho, of the 2nd Bankruptcy Court of São Paulo (case n. 1119642-14.2018.8.26.0100), the main purpose is to organize a mediation with the creditors and the judicial administrator, in order to provide an opportunity for creditors to express their interests before the debtor presents the reorganization plan.

The purpose is to provide the conciliation between the interests of the creditorss and the payment capacity of the debtor, avoiding an imposition from the court and to enable the occurrence of a meeting of creditors merely for homologation, which will be more effective. It is important to notice that this method will not be applied indiscriminately to all law cases, but when it is possible and convenient, based on the analysis of parties’ common interests and divergences.

The inauguration of this procedure occurred in the judicial reorganization of the bookstore chain Saraiva, with the convocation of the more than a thousand creditors for a mediation’s session, supported by the trustee.