[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN BRAZIL] 11
Note that the stay period does not affect post-petition claims, so new obligations hired by the debtor shall be paid normally by the debtor, under penalty of having new enforcement proceedings/collection claims filed by the creditors and new attachments/se izures over debtor’s assets. Also, tax claims are not affected by the stay period, but the Judge of the Judicial Reorganization shall have a kind of priority over the company’s assets, so the Judge of a tax claim cannot attach or block assets that could be essentials to the success of the Judicial Reorganization. The Brazilian Bankruptcy and Reorganization Law explicitly allows for a one-time extension of the 180-day stay period for an additional 180 days, provided the delay in voting on the reorganization plan is not due to the debtor in possession. The stay period may be extended a second time if creditors submit an alternative Judicial Reorganization Plan, as outlined in Article 6, Paragraphs 4 and 4-A, and Article 56, Paragraph 4. Extrajudicial Reorganization: the 180-day stay period is not a rule in the Extrajudicial Reorganization but can be (i) negotiated with the creditors subject to the Extrajudicial Reorganization and (ii) requested to the Judge in charge of the proceedings. Considering that the Extrajudicial Reorganization achieves only some classes of creditors, so the stay period also achieves only the same classes of creditors. Liquidation/Bankruptcy: there is no stay period in the Liquidation/Bankruptcy proceeding. Once the Liquidation is declared, all the debtors’ assets will be
gathered and sold to pay the creditors, according to the priority list. ii) What is the extent of the protection? (e.g. it includes all of the debtor’s assets; Is it limited to several assets for which the debtor may ask for protection? Is it at the court’s discretion to include any asset? etc.) Judicial Reorganization: The stay period protection extends to all assets of the company filing for Judicial Reorganization — cash, real estate, equity interests, etc. However, assets pledged as collateral in fiduciary alienation agreements are not protected by the stay period, as creditors with such collateral are not subject to the effects of the judicial reorganization. Extrajudicial Reorganization: The stay period protection extends to all assets of the company filing for Judicial Reorganization — cash, real estate, equity interests, etc., but only for the creditors that are subject to the effects of the Extrajudicial Reorganization. Liquidation/Bankruptcy : Not applicable. iii) By whom it is granted? (e.g. by a court decision or by injunctions or directly by the law etc.) The stay period is typically granted by the State Court or by the Court of Appeals if the lower instance has not authorized the processing of Judicial/Extrajudicial Reorganization. iv) Does the protection include only the debtor, or may it cover other persons as well (e.g. guarantors)? The stay period protection generally applies only to the debtor and the companies that have requested
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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