Historically, case law has tended to reduce the influence of tax liabilities on judicial reorganizations, with the recurrent relaxation of the rules on mandatory proof of good tax standing for companies petitioning for judicial reorganization (articles 191-A of the National Tax Code[1] and 57 of Law 11,101/05).[2] Thus, reorganization plans used to be granted regardless of the existence of material tax debts. Due to a new regulatory and tax scenario, combined with the advent of Law 14,112/20, there has been a change in this system, with a much stronger presence of the tax authorities in the judicial reorganization proceedings.

Initially, the Superior Court of Appeals (STJ) set aside the requirement for good tax standing in judicial reorganizations, based on a teleological interpretation: based on the premise, which is true, that companies resorting to judicial reorganization had high tax liabilities, the requirement of a certificate of good tax standing could make any reestablishment of a company in crisis unfeasible, especially in a scenario in which the legislation did not provide for special measures aimed at tax recovery of the company in crisis.

In effect, although Law 11,101/05 and article 155-A, paragraph 3, of the National Tax Code[3] enunciate the possibility for the Public Treasuries to grant installment payments of their debt claims in the context of judicial reorganizations,[4] initially, there was no specific legal provision to institute this type of installment payment. In the legislative scenario at the time, the STJ decided[5] that the requirement for a clearance certificate (or positive certificate with effect of clearance) for tax debts represented an affront to the very purpose of the concept of judicial reorganization, which is to make it possible to overcome a situation of economic and financial crisis on the part of the debtor, in order to allow maintenance of the source of production, employment of workers, and the interests of creditors, thus promoting the preservation of the company, its social function, and stimulus of economic activity.”[6] Given the lack of a specific law regulating the installment payment of tax and social security debts of companies under judicial reorganization, therefore, the requirement for good tax standing is now waived.

Even the legislative innovation promoted by Law 13,043/14, which inserted a special installment plan for the judicial reorganization context, was not enough to change the guidance established by the STJ.

Since the inclusion of article 10-A in Law 10,522/02 (inserted by Law 13,043/14 and repealed by Law 14,112/20), there is now a specific installment payment plan for companies under judicial reorganization:[7] the payment of debts could be made within up to 84 consecutive monthly installments calculated in increasing amounts, from the 1st to the 12th installment: 0.666%; from the 13th to the 24th installment: 1%; from the 25th to the 83rd installment: 1.333%; and the remaining balance due on the 84th installment.

Despite this legislative innovation, the STJ has repeatedly maintained the position that good tax standing is not necessary for the judicial reorganization purposes. The reasoning behind the decisions evolved along the lines that it would be more appropriate to give prevalence to judicial reorganization, and its intention to effectively ensure the reorganization of companies in crisis, to the detriment of tax regularization.

In some decisions, the unreasonableness of the good tax standing requirement was highlighted because: "the legal requirement is not adequate for the purpose it pursues, to guarantee payment of the tax debt, nor does it seem necessary to achieve this purpose: (i) inadequate because, by preventing the granting of judicial reorganization to a debtor in an irregular tax situation, it imposes an even greater difficulty for the Tax Authorities, in view of the classification of the tax debt, in the event of bankruptcy, in third place in the order of preference; (ii) unnecessary because the means for collection of tax debts are not suspended with the granting of the application for reorganization."[8]

As a result of the jurisprudential guidance for the setting aside of the good tax standing requirement, controversies have arisen with regard to the simultaneous processing of judicial reorganizations and tax executions.[9]

In particular, situations were discussed in which a judicial reorganization was negatively impacted by foreclosure measures determined by the courts in tax foreclosures: not infrequently, assets of entities undergoing judicial reorganization, relevant to the fulfillment of the plan approved by the general meeting of creditors, were seized to guarantee or even pay tax debts.

In analyzing this aspect of the debate on judicial reorganization and the collection of tax debts, the First Section of the STJ held that "tax enforcement is not stayed by the granting of judicial reorganization, allowing the performance of constrictive acts, especially when it is evidenced that the company under reorganization failed to take the measures necessary to suspend the enforceability of tax debts, especially through the special installment plan governed by article 10-A of Law 10,522/2002, included by Law 13,043/2014."[10]In turn, the Second Section of the STJ has held that “the granting of judicial reorganization does not suspend tax enforcement, but acts involving attachment or disposal of the assets of the company under reorganization must be submitted to the bankruptcy court (...) the enactment of Law 13,043/2014 - which added article 10-A to Law 10,522/2002 and disciplined the installment payment of debts of companies under judicial reorganization - does not (...) have the power of altering the jurisprudential understanding highlighted."[11]

Thus, the First and Second Sections of the STJ have established divergent positions on the subject by drafting decisions according to the limitations of their competencies. Faced with the clash of public vs. private interests, the First Section, which is competent to judge public matters (especially in disputes over tax foreclosures), emphasized the jurisdiction of the tax foreclosure court to the detriment of the judicial reorganization court. Meanwhile, the Second Section, which decides on private matters (including disputes arising from judicial reorganizations), has favored the opposite: the superimposition of the judicial reorganization court over the tax foreclosure court.

This jurisprudential disagreement justified: (i) the filing of a conflict of jurisdiction to define which Section of the STJ had jurisdiction to decide on conflicts between the tax enforcement and the judicial reorganization courts; and (ii) the allocation, by the First Section, of appeals for judgment under the system of repetitive appeals to decide on Topic 987:[12] "possibility of performing constrictive acts against a company under judicial reorganization in the tax enforcement system."

The jurisdiction of the Second Section was established as prevailing[13] to “try and decide conflicts of jurisdiction between the court of judicial reorganization and that of tax foreclosure, whether by the criterion of specialty or by the need to avoid disparate judgments and the consequent legal insecurity.

As a consequence, Topic 987 ended up being withdrawn[14] due to the recognition of the competence of the Second Section to decide the dispute (remember that the allocation of the appeals had been undertaken by the First Section) and for an additional reason: the supervening enactment of the changes made by Law 14,112/20 in Law 11,101/05, which now sets forth that the granting of judicial reorganization does not hinder collection through tax foreclosures, "admitting, however, the competence of the judicial reorganization court to mandate the substitution of the acts of constriction that fall on capital assets that are essential to maintain the business activity until the termination of the judicial reorganization, which shall be implemented through jurisdictional cooperation, pursuant to article 69 of Law No. 13,105, of March 16, 2015.” This provision resolved the conflict between judicial reorganization and tax foreclosure courts.

This digression on the STJ case law regarding the topics of judicial reorganization, tax compliance, and tax foreclosures is fitting to elucidate the intrinsic relationship between them and the fact that Law 14,112/20 has already had repercussions in the STJ. The issue is that other provisions of Law 14,112/20, linked to recent tax rules, are impacting other aspects of the processing of judicial reorganizations, in particular the restricted applicability of the understanding on the mitigation of the requirement for a tax clearance certificate in judicial reorganizations.

Since Law 14,112/20 made changes to the Company Reorganization and Bankruptcy Law, there has been an increasing participation by the tax authorities in judicial reorganization. This change is in line with the fact that the new legislation established rules for the installment payment of debts of companies under judicial reorganization and referenced the alternative ways of settlement and procedural legal transactions to settle tax liabilities.

Law 14,112/20 inaugurated new modalities of special installment plans for companies under judicial reorganization (and repealed the installment plan then provided for by Law 13,043/14), namely:

  • Within up to 120 installments, from the 1st to the 12th, 0.5%; from the 13th to the 24th, 0.6%; and from the 25th onwards, a percentage corresponding to the remaining balance, within up to 96 successive monthly installments;
  • Settlement of up to 30% of the debt with credits arising from tax losses and negative basis of the Social Contribution on Net Income or with other own credits related to the taxes managed by the Special Bureau of the Federal Revenue of Brazil and installment payment of the remaining balance within up to 84 installments, from the 1st to the 12th, 0.5%; from the 13th to the 24th, 0.6%; and from the 25th onwards, a percentage corresponding to the remaining balance, within up to 60 successive monthly installments;
  • Taxes, as a rule, that cannot be paid in installments: subject to withholding, discount from third parties or subrogation, as well as IOF withheld and not paid to the National Treasury (article 14 of Law 10,522/02).

Moreover, Law 14,112/20 incorporated into the judicial reorganization legislation a reference to the alternative of tax debt equalization through a settlement proposal related to debt claims, under the terms of Law 13,988/20. In this case, the maximum payment term can reach 145 months, with reductions of up to 70%.

Both the special installment payment modalities for companies under judicial reorganization and the framework for tax settlements were regulated by the Brazilian Federal Revenue Service and/or the National Treasury Attorney's Office, so that they can already be implemented by companies under judicial reorganization.[15]

Added to this regulatory context is the recent regulation of the institute of procedural legal transactions, which may deal with the acceptance, evaluation, substitution, and release of guarantees or settlement of debts recorded as collectible debt of the Federal Government and the FGTS. This alternative is supported by the supplemental legislation[16] and Law 10,522/02[17] and was disposed of by the Attorney General’s Office for the National Treasury through Ordinance PGFN 742/18.

As can be seen, at present (and contrary to what prevailed at the time when the STJ's understanding was established for waiving the requirement of good tax standing in judicial reorganization), companies under judicial reorganization have means, in conceptual terms, even significantly beneficial and comprehensive, for regularization before the tax authorities. This is why there is a more incisive role for the tax authorities in judicial reorganizations, and the validation of this stance by court decisions for which the legal requirement for a tax clearance certificate in judicial reorganizations is no longer justified.

The appellate judge Cesar Ciampolini, from the 1st Chamber Reserved for Business Law of the Court of Appeals of the State of São Paulo, issued a sole judge decision accepting the treasury’s petition for the suspension of the judicial reorganization until the tax liabilities are settled.[18] In this case, the judicial reorganization plan had been ratified without the presentation of a tax clearance certificate, under the theory that evidence of "positive conduct of the debtor that does not have its tax situation solved" would be sufficient for granting judicial reorganization, with the proviso that such a measure would not be appropriate only in the case of a delinquent debtor or one that proves to be negligent with regard to the obligation to pay what it owes to the tax authorities. The decision was reversed in court based on Law 14,112/20: it was established that the advent of the law imposes the requirement for clearance certificates for the granting of judicial reorganization, as an important legislative initiative to restructure the judicial reorganization procedure and prevent public claims from being placed in second place and settled after the payment of private creditors.

In the case of the judicial reorganization of Maralog Distribuição S.A., the 2nd Chamber Reserved for Business Law of the Court of Appeals of the State of São Paulo granted the interlocutory appeal filed by the Federal Government (National Treasury) against a decision that had dismissed the requirement of proof of good tax standing of the company under reorganization.[19] In this case, Maralog supposedly went from a situation of giid tax standing, in effect at the time the judicial reorganization was granted, to a situation of tax irregularity. In hearing the case, the court found that equalization of the tax debt was mandatory, especially based on the rules introduced in the legal system by Law 14,112/20 (which allowed the installment payment of debt claims of businessmen or business companies whose judicial reorganization has been granted), under penalty of conversion of the judicial reorganization into bankruptcy.

The Attorney General's Office for the National Treasury of the Regional Office of Uberlândia/Minas Gerais filed a complaint in the record of the judicial reorganization of Samarco Mineração S. A.[20] to request its inclusion in the case as an interested third party, stating the amount of the debts recorded as overdue federal liability in an irregular situation and the instruments available for negotiation of the debt, and requesting that the company be summoned to procure equalization of the tax liability. After the judge ordered Samarco to be heard,[21] the company reported that it was in talks with the Public Prosecutor's Office to enter into a legal procedural settlement and, subsequently, attached to the record of the judicial reorganization the instrument of the legal procedural settlement in camera.[22] In hearing the company's petition, the judge order that the confidentiality of the terms agreed upon "is incompatible with the judicial reorganization process, since knowledge about the tax liabilities is of interest to all the participants in the proceeding," ordering the document to be made available to the parties.[23] Samarco's court-supervised reorganization plan was still pending review in the court at the time of this article's publication.

In the case of Odebrecht S. A. and other companies, before the advent of Law 14,112/20, the judicial reorganization was granted with the proviso that the company in reorganization should adjust its tax liabilities within one year.[24] in order to avoid probable controversy on the subject, the companies that had not yet attached their tax clearance certificate to the case record did so.[25]

In Rio de Janeiro, the decision that had ratified the judicial reorganization of Hotéis Othon S/A and others[26]  was annulled by the 16th Civil Chamber of the Court of Appeals to enforce the requirement of the tax clearance certificate, because, for the reporting judge, the denial of the application of such provision, together with the restrictions on the seizure of assets of the company under reorganization, would lead to undue reduction of the “tax debt, ignoring its dignity and the relationship between taxes and fundamental rights.” Pursuant to the appellate decision, one emphasized the constitutionality of article 57 of Law 11,101/05, especially under the "new clothing" given to it by Law 14,112/20, which maintained the requirement of tax compliance for the granting of judicial reorganization, guaranteeing the extension of the deadline for payment of the debt up to 120 months.

In the judgment of a constitutional complaint filed against a decision by the STJ that had ruled out the observance of article 57 of Law 11,101/05, Justice Luiz Fux,[27] of the Federal Supreme Court (STF), granted an in limine relief to suspend the effects of the decision, based on the understanding that the judicial reorganization system imposes on the debtor, in addition to negotiating with private creditors, regularization of its tax situation, which, at present, can be done even through a tax settlement (Law 13,988/20). Although this decision was reversed,[28] the decision expressly considered the new regulatory scenario that has led to a change in case law on the effects of tax liabilities in judicial reorganizations. Justice Luiz Fux's decision has even guided the understanding expressed by the Special Body of the Paraná Court of Appeals, which dismissed the argument of unconstitutionality to establish the constitutionality of article 57 of Law 11,101/05, on September 21, 2020.[29]

Based on these examples, it is possible to confirm that the evolution of instruments to equalize tax liabilities is leading to a change in the processing of judicial reorganizations, with closer relations between the companies under reorganization and the tax authorities and greater emphasis on good tax standing. It is up to the company in economic and financial crisis to explore the new alternatives for negotiating its tax debts, in the terms that best meet the particularities of its situation, in order to avoid clashes in the judicial reorganization.


[1] Article 191-A. Granting of judicial reorganization depends on presentation of proof of clearance of all taxes, with due regard for the provisions of articles 151, 205, and 206 of this Law. (Included by Lcp No. 118, of 2005)

[2] Article 57. After the plan approved by the general meeting of creditors has been attached to the case record or after the time limit provided for in article 55 of this Law without objection from creditors, the debtor shall submit clearance certificates for tax debts pursuant to articles 151, 205, 206 of Law No. 5.172, of October 25, 1966 - National Tax Code.

[3] Article 155-A (...) Paragraph 3. A specific law shall provide for the conditions for installment payment of tax debts of the debtor under judicial reorganization. (Included by Lcp No. 118, of 2005)

Paragraph 4. The non-existence of the specific law referred to in paragraph 3 of this article means that the general installment payment laws of the State shall apply to the debtor under judicial reorganization; in this case, the installment payment term cannot be shorter than that granted by the specific federal law. (Included by Lcp No. 118, of 2005)

[4] Article 68. The Public Treasuries and the National Institute of Social Security (INSS) may grant, pursuant to specific legislation, installment payment of their debt claims, in the context of judicial reorganizations, in accordance with the parameters established in Law No. 5,172, of October 25, 1966 (National Tax Code).

[5] BUSINESS AND TAX LAW. SPECIAL APPEAL. JUDICIAL REORGANIZATION. REQUIREMENT THAT THE COMPANY IN REORGANIZATION MUST PROVE ITS GOOD TAX STANDING. ARTICLE 57 OF LAW N. 11,101/2005 (LRF) AND ARTICLE 191-A OF THE NATIONAL TAX CODE (CTN). INOPERABILITY OF THE AFOREMENTIONED PROVISIONS. ABSENCE OF A SPECIFIC LAW REGULATING THE INSTALLMENT PAYMENT OF TAX AND SOCIAL SECURITY DEBTS OF COMPANIES UNDER JUDICIAL REORGANIZATION. 1. Article 47 serves as a guideline to guide the operation of judicial reorganization, always aiming at the institute's purpose, which is "to make it possible to overcome a situation of economic and financial crisis on the part of the debtor, in order to allow maintenance of the source of production, employment of workers, and the interests of creditors, thus promoting the preservation of the company, its social function, and stimulus of economic activity.” 2. Article 57 of Law No. 11,101/2005 and article the provisions of article 191-A of the CTN must be interpreted in light of the new guidelines established by the legislator for tax debts, particularly in view of the legal provision for the installment payment of the tax debts on behalf of companies under reorganization, which is a cause for suspending the enforceability of the tax, pursuant to article 151, subsection VI, of the CTN. 3. The tax installment plan is a right of the company under judicial reorganization that leads to a situation of good tax standing, such that any non-compliance with the provisions of article 57 of the LRF can only be attributed, at least immediately and for the time being, to the absence of specific legislation regulating the installment plan in the context of a judicial reorganization, not constituting a burden for the taxpayer, when the legislator is silent, to presentation of certificates of good tax standing in order to be granted reorganization. 4. Special appeal not granted relief. (Special Appeal 1187404/MT, opinion drafted by Justice Luis Felipe Salomão, Special Court, decided on June 19, 2013, published in the electronic gazette of the judiciary on August 21, 2013).

[6] Article 47 of Law 11,101/05.

[7] Article 10 of Law 10,522/02 establishes the "general" installment payment of debts of any nature with the National Treasury, under the following conditions (less beneficial than the "special installment payment for the judicial reorganization context": within up to 60 monthly installments, according to the wording of Law 10,637/02.

[8]Special Appeal 1864625/SP, opinion drafted by Justice Nancy Andrighi, Third Panel, decided on June 23, 2020, published in the official gazette of the judiciary on June 26, 2020.

[9] Law 11,101/05. Article 6, paragraph 7. Tax foreclosures are not suspended by the granting of judicial reorganization, except in the case of payment in installments, pursuant to the National Tax Code and specific ordinary legislation. (Repealed by Law 14,112/20)

National Tax Code. Article 186. The tax debt takes precedence over any other, regardless of its nature or the time of its formation, with the exception of debt claims resulting from labor legislation or occupational accidents. (As amended by Lcp No. 118, of 2005); Article 187. Judicial collection of the tax debt is not subject to a creditors' list or registration in bankruptcy, judicial reorganization, scheme of arrangement, inventory, or probate. (As amended by Lcp No. 118, of 2005)

Tax Foreclosure Law. Article 5. The competence to try and decide the execution of the Public Treasury's Outstanding Debt excludes that of any other court, including bankruptcy, scheme of arrangement, liquidation, insolvency, or inventory; Article 29. Judicial collection of the Public Treasury's Outstanding Debt is not subject to a creditors' list or registration in bankruptcy, scheme of arrangement, liquidation, inventory, or probate.

[10]Special Appeal 1673421/RS, opinion drafted by Justice Herman Benjamin, Second Panel, decided on October 17, 2017, published in the electronic gazette of the judiciary on October 23, 2017.

[11] Theory No. 08, of the 37th edition of Jurisprudence in Theories of the STJ.AgRg in CC 136.130/SP, reporting judge Justice Raul Araújo, opinion drafted by Justice Antonio Carlos Ferreira, Second Section, decided on May 13, 2015, published in the electronic gazette of the judiciary on June 22, 2015, and others.

[12] Special Appeal 1694261/SP, Special Appeal 1694316/SP, Special Appeal 1712484/SP, Special Appeal 1757145/RJ, Special Appeal 1760907/RJ, Special Appeal 1765854/RJ, Special Appeal 1768324/RJ.

[13]CC 153.998/DF, Reporting Justice Laurita Vaz, opinion drafted by Justice Nancy Andrighi, Special Court, decided on December 18, 2019, published in the electronic gazette of the judiciary on September 22, 2020.

[14] Special Appeal 1694261/SP, opinion drafted by Justice Mauro Campbell Marques, First Section, decided on June 23, 2021, published in the Electronic Gazette of the Judiciary on June 28, 2021.

[15]RFB/PGFN Joint Ordinance No. 895, of May 15, 2019, and PGFN Ordinance No. 2382, of February 26, 2021.

[16] Code of Civil Procedure, article 190. When the lawsuit deals with rights that admit settlement, it is lawful for fully capable parties to stipulate changes in the procedure to adjust it to the specifics of the case and to agree on their procedural burdens, powers, faculties, and duties, before or during the lawsuit.

[17] Article 19, paragraph 13. Without prejudice to the provisions of paragraph 12 of this article, the Attorney General's Office for the National Treasury will regulate the execution of procedural legal settlements within its scope of action, including in the administrative or judicial collection of outstanding federal debt. (Included by Law No. 13,874, of 2019)

[18] Case No. 2215483-23.2021.8.26.0000, decision dated September 24, 2021: judicial reorganization of Ponto Final Participações e Empreendimentos Ltda.

[19] Case No. 248841-13.2020.8.26.0000, decided on August 10, 2021.

[20] Case No. 5046520-86.2021.8.13.0024, in progress before the 2nd Business Court of the Judicial District of Belo Horizonte/MG. The petition referred to is ID 4055338020.

[21] As per ID 4139833018 – Decision.

[22] As per ID 4555558026 – Petition and 4573277993 – Petition.

[23] As per ID 4795738014 – Decision.

[24] Judgment handed down on July 27, 2020 - pp. 35,809-35,847.

[25] On January 22, 2021, March 1, 2021, and July 19, 2021.

[26] Case No. 0046087-14.2020.8.19.0000, decided on April 6, 2021.

[27] Complaint No. 43.169 MC/SP, decided on September 4, 2020.

[28] On December 3, 2020, under the understanding that the dispute has infra-constitutional nature, the constitutional complaint was denied.

[29] Argument of Unconstitutionality No. 0048778-19.2019.8.16.0000.