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News on debt restructuring and insolvency
Superior Court of Justice establishes attorneys’ fees in credit claim based on the amount attributed to the claim
The amount attributed to the claim shall be the parameter for the calculation of attorneys’ fees in credit claim incident to judicial reorganization proceeding (“JR”), according to a recent ruling issued by the third panel of the Superior Court of Justice (“STJ”) in the special appeal n. 1.821.865/PR, reported by Justice Marco Aurélio Bellizze.
In the case ruled, the creditor, a financial institution, filed the incident to request its BRL 3.9 million claim to be removed from the list of claims subject to the JR and attributed such amount to the claim. The incident was ruled groundless and attorneys’ fees were initially established at BRL 2 thousand. The Court of Appeals of the State of Paraná (“TJPR”) ruled that the incident did not involve a dispute over the claim in itself, rather only over its method of payment (under the JR plan or not) and that therefore the economic benefit of the final ruling would not be measurable, which would imply the establishment of attorney’s fees based on equity standards.
Upon reviewing the case, the STJ stated the credit claim was filed under the 2015 Code of Civil Procedure, which states that equity standards are only applicable “when the amount of the claim is very low”, which was not the case. Therefore, the STJ established the attorney’s fees at 10% of the updated amount attributed to the claim.
Motions for clarification of the STJ’s ruling have been filed by the financial institution, by the debtor under JR and by its attorneys, still pending ruling by the STJ.
Superior Court of Justice relaxes legal standard and admits judicial reorganization filed by farmers not registered for 2 years
With a split voting, the fourth panel of the Superior Court of Justice (“STJ”) ruled that all debts incurred by farmers are subject to judicial reorganization (“JR”), even those prior to the farmers’ registration as a business person before the Board of Trade, as per the ruling of the special appeal n. 1.800.032/MT, on 11/5/2019.
The full contents of the written ruling are not yet available and shall be prepared by Justice Raul Araújo, but the final result indicates the overruling of the decision issued by the Court of Appeals of the State of Mato Grosso, which had stated that credits constituted before the registration of the farmer as a business person were not subject to JR.
Superior Court of Justice rejects waiver and shall proceed with trial of a special appeal concerning the release of collaterals without the consent of creditors in judicial reorganization
In a ruling published on 11/26/2019, Justice Nancy Andrighi has rejected a waiver request filed in the special appeal n. 1.797.924/MT, as its trial has already begun under the second section of the Superior Court of Justice (“STJ”).
The appeal was filed against a ruling issued by the Court of Appeals of the State of Mato Grosso which deemed illegal a clause in the judicial reorganization plan that provided for the release of collaterals granted by third parties to the creditors, which aimed at reaching even creditors that did not consent to the release.
The STJ betook a provision of its internal regulations to send the case for trial under the Court’s second section, with the purpose of settling a divergence that recently emerged from two non-unanimous ruling issued by the Court’s third panel admitting the release of collaterals (special appeals nn. 1.532.943/MT and 1.700.487/MT), which contradicted the STJ’s historic position on the matter, that the consent of the creditor holding the collateral was necessary for its release.
The Reporting Justice has already issued its vote for the clause releasing collaterals to be deemed illegal, but the trial was adjourned due to a request of Justice Luis Felipe Salomão. After the adjournment, the debtor under judicial reorganization filed a petition waiving the appeal, which was rejected by the Reporting Judge, and thus the trial shall continue under the second section.
Superior Court of Justice shall settle if interlocutory appeals are admitted in judicial reorganization proceeding
The second section of the Superior Court of Justice (“STJ”) shall settle if interlocutory appeals must be admitted or not against rulings issued throughout judicial reorganization and bankruptcy proceedings.
The STJ has decided, on 9/17/2019 (ProAfR-REsp n. 1.717.213/MT), that the matter shall be ruled under the procedure of repetitive appeals, which must be mandatorily observed by the State Courts of Appeals, according to the Code of Civil Procedure.
The eventual STJ’s ruling should settle the discussion that emerged with the Code of Civil Procedure of 2015, which establishes a list of specific rulings subject to interlocutory appeal which does not expressly mentions rulings issued in judicial reorganization or bankruptcy proceedings.
To present contributions to the trial, the STJ has nominated as amici curiae the Brazilian Institute of Procedural Law, the Federal Government’s General Counsel, both of which have already presented opinions favorable to the admittance of interlocutory appeals in this context, as well as the Brazilian Bar Association and the Federal Government’s Public Defenders’ Office, still pending to opine, and a specific opinion from the Federal Public Prosecution Office (although this entity was not nominated amicus curiae).
The trial date has not been scheduled yet.
Court of Appeals of São Paulo admits the seizure of revenues of a company under judicial reorganization to pay a claim not subject to the procedure
The seizure of 10% of the net revenues of a debtor under judicial reorganization proceeding (“JR”) has been authorized to pay for a claim not subject to JR, as per a ruling issued by the 2nd Business Panel of the Court of Appeals of São Paulo (“TJSP”), reported by Justice Maurício Pessoa (interlocutory appeal n. 2051709-79.2019.8.26.0000).
In the case ruled, a financial institution holding a claim of about BRL 115 million against the OAS Group, not subject to JR, requested the seizure of the debtors’ bank accounts or revenues, but the request was dismissed by the Judge overseeing the JR with the argument that such assets “are essential for the debtors to be able to comply with the JR plan”.
Upon reviewing the case, the TJSP asserted that “it is not acceptable that the debtors take the comfortable position of (…) ‘I owe, I do not deny it and I will pay when and how I can” with regard to claims not subject to JR. The TJSP also stated that seizing revenues, and not the bank accounts, is the most appropriate measure to reconcile the creditors’ and debtors’ interests, poising “the principles of effectiveness of the enforcement proceeding and the preservation of the debtor’s company, under a proportionality judgment”.
