The government’s idea of taking out of the bankruptcy bill the possibility of judicial recovery of companies – and to let creditors in charge of the negotiation of the payment of debt – has not pleased lawyers. The bankruptcy bill shall be posted in the Congress’s extraordinary agenda on July 1st. Lawyer Maria Isabel Alvarenga, of Machado, Meyer, Sendacz e Opice Advogados, says that “it doesn’t make sense to simply take from the bill the judicial recovery without replacing the mechanism with anything else.”
The bankruptcy bill establishes the end of “concordata” (court composition with creditors) and two new kinds of recovery: in and out of courts (judicial and extra judicial). In the judicial recovery, the Judiciary branch supervises the negotiations and confirms them. In the extra judicial, the agreement is made between creditors and debtors. According to Alvarenga, the possibility of two alternatives for the company’s recovery is interesting. In the cases where the renegotiation with creditors is successful, the extra judicial recovery is very efficient because it is faster and more effectiveness.
In the cases where such extra judicial agreement cannot be reached, one can opt to the judicial recovery, which represents a new attempt – this time before a judge, with the participation of the department of justice (“Ministério Público”) – to solve the company’s problems without necessarily declaring the company bankrupt. Alvarenga reminds that the Bakruptcy Law is “ancient” (dated 1945). According to her, the “concordata” as set forth in the current law “is no longer able to allow the recovery of the company, which most times ends up bankrupt”. To the lawyer, the two new types of recovery give more leeway to reaching an agreement with creditors that effectively allows a company’s restructuring and avoids its bankruptcy.

Sources:   Revista Consultor Jurídico June 23, 2003
Date of insertion:   26/06/2003 - 18:38:38