The new Code of Civil Procedure (CPC) prizes the parties' autonomy of will and values conciliation and the institution of a cooperative procedural model, principles embodied in the institute of procedural legal business (article 190). Fully capable parties may directly influence and participate in proceedings involving rights that admit self-resolution, with a provision regarding settlements on procedural encumbrances, powers, prerogatives, and duties.
The legislator's expectation was to ensure greater speed and effectiveness to proceedings since, in certain circumstances, the parties may adapt procedural rules to the specifics of the case.
Court reorganization, in turn, constitutes a proceeding subject to a special framework established by Law No. 11,101/2005 (Law on Bankruptcies and Corporate Reorganizations - LFR), in which the CPC finds secondary application to the extent it is fitting and where bankruptcy legislation is incomplete or contains omissions.
In view of this, considering that court reorganization involves a great deal of collective bargaining over eminently property rights, fundamentally between debtors and creditors, the possibility of adapting the deadlines set forth in the LFR to the reality of each case was debated, among other points, as was the possibility to use mediation between the debtor and creditors.
In other words, one conceives of applying procedural legal business to court reorganization in order to adapt the reorganization process to certain peculiarities. Some examples of this are: (i) insufficient term to hold a general meeting of creditors and present a robust court reorganization plan when it relates to a business group with a sophisticated debt profile and various stakeholders (OAS Group, OI Group, Abengoa Group); (ii) counting the time limits on the basis of business days and not calendar days, especially to present challenges to or registrations of debt claims, considering the new rules of the CPC; and (iii) the time limit for concluding the court reorganization (article 61, LFR), which may be very extensive, thereby exposing the debtor to reputational wear for a longer period than necessary.
In this sense, some judicial decisions issued by First Degree Courts have already modulated the procedural rules and the time limit for court reorganization according to the principles of procedural legal business. This is precisely the case of the companies Eneva (placed in Rio de Janeiro) and Zamin (placed in São Paulo), in which the judge of such cases ordered the conclusion of court reorganizations within a time period shorter than the two years provided for in article 61 of the LFR, on the grounds that the respective court reorganization plans provided for shorter obligations and that companies would remain in court reorganization for an extended period of time, thus facing known problems with credit restriction and creditworthiness on the market.
However, although the Rio de Janeiro Court of Appeals upheld the First Degree Court decision, this was not the understanding of the São Paulo Court of Appeals, which modified the decision in Zamin case, affirming that the rule of judicial supervision of two years is cogent and shortening it could cause harm to the community of creditors by imposing a restriction on the creditors’ guarantee, supported by the Judiciary, of the conversion into automatic bankruptcy due to breach of the court reorganization plan.
It will therefore be incumbent on the Superior Court of Justice (STJ) to settle the controversy and settle an understanding with respect to the limits of application of the CPC to court reorganizations. Although STJ has already positioned itself in relation to the counting of time limits in calendar days for a stay period and for the presentation of the plan (Special Appeal REsp 1.699.528/MG), there has still been no ruling by the STJ regarding the possibility of applying the institute of procedural legal business to court reorganizations.
In principle, we have a positive outlook for application of procedural legal business to court reorganizations, with the possibility that debtors and creditors may define, among other points, a specific procedural calendar.
Procedural legal business and court reorganization