BRAZIL Law and Practice Contributed by: Renata Iezzi, Nicole René Gomes e Cunha and Marcela Correa, Basch & Rameh
no erroneous decisions in future judicial recuperation cases. Leased aircraft are not deemed part of a lessee’s property during a bankruptcy proceeding. If an air - line is placed into liquidation, the aircraft or engines would be returned to the lessors/owners, as applica - ble. In liquidation, claims of lessors would usually be grouped with unsecured claims. The liquidation of Brazilian airlines is a lengthy process that tends to persist for years. There are seven airlines currently in liquidation: • Transbrasil; Two Brazilian airlines, Gol Linhas Aéreas and Azul Linhas Aéreas Brasileiras, filed for protection with New York courts under the US Chapter 11 proceed - ing. There are no parallel proceedings in Brazil. Both insolvency proceedings are taking place entirely out - side Brazil, with no participation or protection from the Brazilian judiciary. The Gol and Azul Chapter 11 proceedings are the first time a Brazilian airline has sought to reorgan - ise outside Brazil. The airline known as “Latam” also reorganised itself in New York using the Chapter 11 procedure, but the primary entity in that proceeding was a Chilean debtor that happened to own a Brazil - ian airline. Therefore, the Gol case was one of first impression, followed by the Azul case in 2025. Both cases are still ongoing at the time of publication. 2.9.3 Co-Ordination, Recognition or Relief in Connection With Overseas Proceedings In late December 2020, the Brazilian Bankruptcy Law was amended to simplify and standardise cross-bor - der insolvency proceedings. Brazil adopted the Model Law on Cross-Border Insolvency promulgated by the United Nations Commission on International Trade Law (the “Model Law”) (also corresponding to Chap - • Varig; • VASP; • VarigLog; • BRA; • Pantanal; and • Oceanair.
ter 15 of the United States Bankruptcy Code). This is intended to foment co-operation among Brazilian and foreign judges, and to increase the legal security of cross-border business activities and investments. The same definitions provided in Article 2 of the Model Law have been incorporated into the Brazilian Bank - ruptcy Law, which contemplates the following: • a foreign proceeding; • a foreign main proceeding; • a foreign non-main proceeding; • a foreign representative; The scope of application of the Model Law is now mirrored in the Brazilian Bankruptcy Law, and a for - eign representative may seek recognition of a foreign proceeding in a Brazilian court. Upon receipt of a legal representative filing, Brazilian courts should recognise the foreign proceeding as either the main or a non- main proceeding, depending on the country where the debtor’s centre of main interests (COMI) is located. The new law confirmed the provision of the Brazilian Federal Constitution, which established that foreign judgments are valid in Brazil only after ratification by the Superior Court of Justice in Brazil; see 2.6.6 Domestic Courts’ Recognition of Foreign Judg- ments/Awards . 2.9.4 Effect of Lessee’s Insolvency on a Deregistration Power of Attorney Both a DPOA and an IDERA should survive a bank - ruptcy restructuring. Conversely, in cases of liquida - tion, powers of attorney are usually deemed revoked but, according to the Cape Town Convention, IDERAs should remain valid. Since the Brazilian airlines that have been placed in liquidation no longer had pos - session of any aircraft, the validity of an IDERA after • a foreign court; and • an establishment. a declaration of liquidation remains untested. 2.9.5 Other Effects of a Lessee’s Insolvency See 2.9.2 Overview of Relevant Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receivership .
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