One of the pillars of every company in judicial reorganization is the search for the best and most efficient means of recovery, in order to achieve both the approval of the reorganization plan by creditors and its organized implementation, consistent with its economic and financial planning and maximum valuation of assets and activities.

One of the most traditional means available to support a company in judicial reorganization is precisely the sale of assets, a process that has undergone profound and important changes in its regulation stemming from the enactment of Law No. 14,112/20, which changed the Law on Recovery of Companies and Bankruptcies (Law No. 11.101/05 – LRF).

The first and important step taken by the legislator was to create, through the reform carried out by Law No. 14,112/20, the legal definition of an isolated production unit (UPI), which includes assets, rights or assets of any nature, tangible or intangible, isolated or jointly considered, including equity interests. Prior to the recent reform, the LRF did not clearly establish which assets could qualify as UPI. In practice, operations of this nature ended up covering the most diverse forms and types of assets.

The legislator was very keen to include in this modality the complete disposal of the debtor (art. 50, item xviii of the LRF), further expanding the range of possibilities to promote the recovery and satisfaction of creditors. However, the article in question states that non-submitted or non-acceding creditors must be guaranteed conditions at least equivalent to those they would have in bankruptcy. At this point, it is also worth mentioning the new provision of the LRF that authorizes the Treasury to request the convolation of the judicial recovery in bankruptcy, when it finds emptying of the debtor's assets or in cases of non-compliance with special tax installments during the judicial recovery process.

In the event of bankruptcy by substantial liquidation of the company, the disposals carried out shall be preserved and considered effective, so as not to harm the third acquirer in good faith. The proceeds of these disposals, on the other hand, should be blocked, with the consequent return to the debtor of the amounts already distributed to any creditors, which will be available to the court.

It is also noteworthy the innovation of making the sales process of UPI and branches more flexible, which no longer needs to be implemented necessarily through auction, trading or presentation of closed proposals. This made the process faster and more objective, benefiting the parties involved. Law No. 14.112/20 has expressly allowed the conduct of the process of selling assets through electronic auction (face-to-face or hybrid) and through competitive process promoted by specialized agent and of unblemily reputed reputation (in addition to any other modalities approved by the LRF). Thus, the procedure was adapted to the new reality of social distancing imposed by the pandemic of covid-19, without affecting the efficiency of the process.

The reform of the LRF also sought to bring greater legal certainty to the process of selling assets and, thus, to promote this means of recovery, by indicating that, provided that the sale of an asset by the recoverer observes the provisions of § 1 of art. 141 and art. 142, this asset will be free of any burden and there will be no succession of the acquirer in the debtor's obligations,  including, but not exclusively, those of an environmental, regulatory, administrative, criminal, anti-corruption, tax and labor nature.

In other words, the investor will be exempt from the liability and risks of succession of the recoverer in some way linked to the asset, which aims not only to increase the interest of creditors in general but, consequently, to increase the price and value the acquisition of the asset.

In any of the means permitted by the LRF, however, the Public Prosecutor's Office and public treasury shall be subpoenaed, electronicly, in accordance with current legislation and respect ing the respective functional prerogatives, under penalty of nullity. It will be interesting to follow the position adopted by the Public Treasury in the analysis of the disposal of an asset that is directly linked to a certain tax liability and/or is the subject of attachment or offered as collateral in tax liabilities.

It is not yet clear whether the previous analysis made by the Public Treasury may delay and even derail the completion of the disposal of assets, if it itself questions the disposal, coming to consider it an act of asset emptying and even, in the future, a fraud to execution, pursuant to Article 185 of the National Tax Code.[1]

In the case of the liquidation of assets in bankruptcy situations, pursuant to Article 143 of the LRF, the right of creditors and the Public Prosecutor's Office to challenge the sale process has been preserved. If the measure is based on in the sale value of the good, only the challenges of the creditors accompanied by a firm offer of the contestor or third party for the acquisition of the good, respecting the terms of the notice, at present value higher than the value of sale, and of a deposit equivalent to 10% of the value offered will be processed.

In conclusion, the LRF, reformed by Law No. 14,112/20, brought important changes in the rules of disposal of assets in order to stimulate its realization, especially by creating a more famous and more flexible procedure and endowed with the necessary legal certainty.


[1] Art. 185. The disposal or burden of assets or rents, or its beginning, by a taxable person in debt to the Public Treasury, is presumed fraudulent by a tax credit regularly entered as active debt.