Publicado em 31/03/2020

CNJ approves recommendations for judicial reorganization and bankruptcy proceedings in light of the impacts of Covid-19

The National Council of Justice (CNJ) approved this Tuesday, March 31, recommendations to judges in the conduct of bankruptcy and judicial recovery proceedings.

The recommendations take into account, among others, the impacts of the covid-19 epidemic on the activities of companies and of the Judiciary and aim to obtain the best possible results in these proceedings, especially in the exceptional period of the pandemic.

The CNJ essentially recommends that judges:

(i) decide with priority requests for withdrawal of deposited amounts;

(ii) suspend General Creditors’ Meetings (GMC) to be attended in person and authorize that GMC are carried out online when necessary;

(iii) extend the stay period (period of stay of proceedings against the debtor) when there is need to postpone the GMC and until they decide about the outcome of such GMC;

(iv) authorize the presentation of an amended recovery plan by a debtor who proves that he has suffered a decrease in his ability to meet obligations due to the covid-19 crisis; and

(v) consider the occurrence of force majeure or other unforeseeable circumstances arising from the covid-19 before declaring the bankruptcy of companies under judicial recovery due to failure to comply with the recovery plan; and

(vi) evaluate with special caution the granting of urgent measures, eviction for non-payment or acts of attachment or sale of assets for non-performing obligations during the period of public calamity decreed due to the covid-19 pandemic.

Although non-binding, these guidelines from the CNJ tend to be followed by the judges.

The vote of the CNJ Reporting Counselor containing the reasons and the full text of the recommendations can be accessed here.