The 6th Civil Chamber of The Minas Gerais State Court of Appeal (Interlocutory Appeals 1.0024.17.054953-9/002 and 1.0024.17.054953-9/001, both judged in 09/05/2017) allowed the enhancement of the trustee powers. It was given the powers inherent to a business manager in order to analyze the corporate group operations and take measures to recovery assets and compensate damages. Thus, the trustee would have the procedural capacity to file a petition to pierce the corporate veil of the legal entity in judicial reorganization as well as would be allowed to proceed in forma pauperis.

The grounds for such decision was the signs of the fraudulent use of the company in benefit of its own controller shareholders, who have abused their controlling power. Thus, it would be necessary to pierce the corporate veil to protect the creditors rights as well as a provisional attachment of the assets of the involved parties.

The 4º Court of the City of Olinda, State of Pernambuco (lawsuit 0001598-70.2015.8.17.2990), determined that HNK BR Indústria de Bebidas Ltda. (“HNK”), current corporate name of Brasil Kirin Indústria de Bebidas Ltda. – holder of the brand Heineken – shall keep the effectiveness of the distribution agreement executed with Grupo Mediterrânea, currently in a judicial reorganization proceeding, and reestablish the supply of goods and services contractually agreed. According to the judge, the fact of the distributor be in a reorganization proceeding turns the distribution agreement an essential asset to the exploitation of its economic activity and the fulfillment of the reorganization plan, especially in the case at hand, in which HNK is the main creditor and the only supplier of the reorganization company.

The judicial decision also prohibited HNK from unilaterally terminate the resale and distribution agreements executed with Grupo Mediterrânea, determining the ineffectiveness of any contractual provision and/or extrajudicial notice related to the termination the agreement. Conversely, the judge maintained the effects of the clause of territorial exclusivity, forbidding Grupo Mediterrânea from commercializing products in areas of other distributors.

The 8th Civil Chamber of Rio de Janeiro State Court of Appeal, in the decision of an interlocutory appeal (Interlocutory Appeal 0043065-84.2016.8.19.0000, judged in 08/29/2017), ruled to maintain the decision of the judicial reorganization’s judge which has suspended the tax execution lawsuits filed by the Brazilian Federal Communications Commission (ANATEL) against OI S/A, a company in judicial reorganization.

The interlocutory appeal was filed based on Article 6th, §7th, of Law 11,101/05 which provides that the grant of the judicial reorganization does not suspend the tax execution lawsuits. However, the Court found that, although the administrative fines imposed by regulatory agencies due to the violation of administrative legislation may be charged with a tax execution procedure, they have administrative legal nature which is the reason why they would not fall under the legal provision raised by ANATEL in its appeal. Such decision was grounded in the concept of tax established in Article 3rd of Brazilian Revenue Code (Law 5,172/1966): “Tax is any compulsory payment, except penalties for illicit acts, to be made in money or that can be expressed in monetary terms, that is required by law and levied through fully non-discretionary administrative acts”.

In addition, the Court referred that Law 11,101/05, by establishing the credits rating in Article 83, distinguished the tax credits (item III, Article 83) from the credits arising from contractual penalties, tax related fines and fines for breach of criminal or administrative law (item VII, Article 83), granting to the tax credits preference in the payment order.

Therefore, considering that the administrative fines applied by regulatory agencies do not fit into the legal concept of tax and observing the distinction provided in Article 83 of the Bankruptcy Law (Law 11,101/05), the tax execution lawsuits in which such fines are discussed are not subject to the exception of Article 6th, §7th, of Law 11,101/05 and may be suspended with the granting of the judicial reorganization.

The 1st Civil, Bankrupt, Judicial Reorganization and Requisitory Letters Court of Cuiabá/MT, in the decision of ratification of the reorganization plan approved by the assembly of creditors of a technology company (lawsuit 23113-52.2015.811.0041), have annulled the labor credits’ payment proposal, due to provision of discount of 30%.

According to the decision (grounded in precedent of Mato Grosso State Court of Appeal, Interlocutory Appeal 99638/2015), this kind of provision is illegal because it provides the application of discount on inalienable rights. That is because Article 7th, VI, of the Brazilian Constitution prohibits the wages’s reduction, except upon collective-bargaining agreement. In addition, the Law 11,101/2005 also establishes, in Article 50, VIII, that the wages reduction as a mean of judicial reorganization is only accepted upon collective-bargaining agreement.

Therefore, due to the alleged incompatibility of the reorganization plan’s provision and the Brazilian laws, which grants privileged nature to the labor credits, the clause related to the payment of labor credits was declared ineffective, and it was decided that such credits must be fully paid.

The 5th Panel of the 5th Region Labor Court, in a recent decision (Ordinary Recourse 0001546-43.2013.5.15.0018), decided that the judicial reorganization does not have the power to hinder the payment of dismissal compensation, even if they are subject to the concourse of creditors, since the company’s activities shall continue.

The defendant, who is in judicial reorganization, alleged, in its defense, that the credit under discussion is subject to the judicial reorganization proceeding, and, thus, the payment could not be done, otherwise the principle of pars conditio creditorum established in Law 11,101/2005 would be violated. Therefore, the payment only could be done under the reorganization plan to be submitted to the assembly of creditors.

However, the Court rejected the company’s arguments, rendering a decision based on Article 49, paragraph 2nd, of Law 11,101/2005, which states that the “obligations preceding the judicial reorganization shall comply with the terms contracted originally or defined by law, including with respect to charges, unless otherwise established in the judicial reorganization plan”, and also condemning the company to the payment of fines provided by the Consolidation of Labor Laws in Article 467 (fine of 50% of dismissal compensation’s undisputed amount, when the employer, appearing in court, do not pay it) and Article 477 (dismissal without just cause). Therefore, the fact that the judicial reorganization was already granted in the maturity date may not be used by the company as hindrance to the payment of dismissal compensation.

Rio de Janeiro State Court of Appeal, in decision rendered in September 2017, in the records of the lawsuit 0474961.48.2014.8.19.0001, authorized the termination of the judicial reorganization process, after Article 61’s two years period from the decision ratifying the judicial reorganization plan, although still pending of judgment a recourse presented by a creditor against that same decision.

The Court’s ruling was held because of a creditor’s irresignment against the judge decision, which authorized the conclusion of the judicial reorganization before the res judicata of the decision ratifying the judicial reorganization plan. According to such creditor, in order to conclude the judicial reorganization, it is not enough for the debtor to perform all obligations established in the plan during the two years’ supervision period.

The rapporteur, Appeals Court Judge Carlos Eduardo Moreira da Silva, following the first instance decision, asserted that, once verified the performance of all obligations established in the plan during the period of two years after concession of the judicial reorganization, the only path is to apply Article 63 of the Law 11,101/05 and conclude the judicial reorganization process and, hence, exclude the expression “– under Judicial Reorganization” from the corporate name, among other legal consequences. Therefore, the termination of the judicial reorganization proceeding does not depend upon the res judicata of the decision ratifying the judicial reorganization plan.

The grounds for such understanding is the Law 11,101/2005’s purpose to limit the negative impacts of the continuation of the judicial reorganization framework, increasing the process costs and embarrassing the credit recovery before financial institutions and goods or services suppliers. Furthermore, creditors that still have credits to receive would still be protected even after the proceedings’ termination, having the possibility to use the concessive decision, in case of nonperformance of any obligation established in the plan, to judicially claim the enforcement of the obligation or even the bankruptcy decree.