Law No. 11211/20, signed on December 24, introduced various changes in the Bankruptcy and Judicial Reorganization Law (Law No. 11,101/05 or the LRF). Among the main ones are those related to the role of the judicial trustee, whose main functions are to assist the court, caring for the good progress of the case, and to supervise the debtor's acts and compliance with the judicial reorganization plan.

The duties of the judicial trustee were expanded, notably due to the other innovations of the LRF, such as the possibility for creditors to present an alternative judicial reorganization plan, the express provision for the use of conciliation and mediation mechanisms, and the regulation of transnational bankruptcy.

The judicial trustee's duties may be divided among those (i) common to judicial reorganization and bankruptcy; (ii) exclusive to judicial reorganization; and (iii) exclusive to bankruptcy.

With regard to the common attributions, the LRF charged the judicial trustee with stimulating alternative methods of dispute resolution, such as conciliation and mediation. Although this provision is a novelty in the LRF, in practice, based on the Mediation Law, Resolution No. 125/2010 of the Judicial Review Board (CNJ) and an ordinance issued by state courts, mediation has long been applied in various cases of judicial reorganization, such as those of Oi and Saraiva, for which mediation was used to resolve various conflicts during the proceeding regarding the reorganization plan, debt claims, and bilateral disputes.

In addition, keeping in line with the digital era, it is now up to the judicial trustee, per provision of law, to maintain an electronic address on the Internet, through which updated information on the proceedings should be made available and requests for qualification and divergences of debt claims should be sent, which facilitates the monitoring of the judicial reorganization by creditors.

In the scope of the judicial reorganization, the judicial trustee also had the scope of its functions extended, mainly in relation to:

  • inspecting the veracity and conformity of the information provided by the debtor to prepare the monthly activity report, the negotiations between debtors and creditors (ensuring that the parties not adopt dilatory or prejudicial arrangements) and the decisions of the general meetings passed by means of a consent form, electronic voting, or some other suitable mechanism (article 39, paragraph 5); 
  • submitting for a vote, in a general meeting of creditors rejecting the judicial reorganization plan proposed by the debtor, the granting of a 30-day period for the creditors to present their judicial reorganization plan (article 56, paragraph 4);
  • submitting within 48 hours a report of the creditors' responses regarding the holding of a general meeting to resolve on the sale of assets, therein requesting the convening thereof.

The new powers of the judicial trustee in bankruptcy include:

  • presenting, within 60 days of their investiture, a detailed plan for realization of the assets;
  • selling all the assets of the bankrupt estate within a maximum period of 180 days, counted from the date of the filing of the notice of collection, under penalty of dismissal, except for reasoned impossibility, recognized by a judicial decision;
  • in the event of insufficiency of the assets for the costs of the proceedings, promote sale of the assets collected within a maximum period of 30 days (for personal property) and 60 days (for real property), if the creditors do not request continuation of the bankruptcy; and
  • collecting the amounts of deposits made in administrative or judicial proceedings in which the bankrupt is a party and which arise from attachments, freezes, seizures, auctions, judicial sales, and other cases of judicial constriction, with the exception of deposits of federal taxes.

One of the LRF's greatest innovations is the regulation of transnational bankruptcy proceedings, in which the performance of the judicial trustee is very relevant. It has authorization to appear in foreign judicial proceedings in the capacity of representative of the Brazilian judicial proceedings, in the event of bankruptcy, and obligation to cooperate and communicate with the foreign authority and with the foreign representatives.

The purpose of the changes in the judicial trustee's duties is to increase the participation of the court clerk’s office and allow it to act in a timely manner, which will end up increasing its responsibilities and its work. Although the novelties are beneficial to the system as a whole, because they increase legal certainty and speed up bankruptcy proceedings, they may discourage those interested in filling this position, especially because of the obligation to confirm the veracity of the debtor company's information.

In any event, it is expected that the actions of the judicial trustees will be under greater scrutiny, and it is up to the Judiciary, the creditors, the debtor, and the company as a whole to demand smoothness, speed, and commitment from the clerks of course in the performance of their duties.