BRAZIL Law and Practice Contributed by: Octaviano Duarte, Henrique Forssell and Marcelo Lucidi, Duarte Forssell Advogados
Duarte Forssell Advogados Alameda Santos, 2326
4º e 10º andar São Paulo – SP CEP 01418-000 Brazil Tel: +55 112 574 7509
Email: contato@dfalaw.com.br Web: www.dfalaw.com.br/en
1. Fraud Claims 1.1 General Characteristics of Fraud Claims Brazilian substantive and procedural law establish several rules that address fraudulent transactions such as the making of false statements, the making of corrupt payments, conspiracy and misappropriation. The specific fraud claim applicable will vary depend - ing on the parties involved – both the perpetrator and the harmed party. In general, the following fraud claims can be pursued by the victim. Civil and Commercial Claims Fraud against creditors Fraud against creditors (in Portuguese, fraude contra credores ), as provided for in the Brazilian Civil Code, is applicable to private creditors in general. Unsecured creditors have the right to challenge an onerous sale of assets and may be able to reclaim the sale pro - ceeds if the seller was notoriously insolvent at the time of the transaction or if the buyer had reason to know about the debtor’s insolvency. Fraud upon the execution of judgment In general, fraud upon the execution of judgment (or fraude à execução in Portuguese) occurs when, at the time of the transfer or encumbrance of assets, there were lawsuits pending against the debtor. Any credi - tor that filed an enforcement proceeding (or any other legal action against the debtor that could lead the latter to insolvency) before the transaction may chal - lenge the transaction and seek to reclaim the assets, provided certain requirements are met.
Abuse of legal personality Under certain circumstances, the making of false statements, the making of corrupt payments, con - spiracy and misappropriation can be considered an act of abuse of legal personality. Under the doctrine of piercing of the corporate veil, shareholders, directors, officers and third parties with - in the same economic group may be held liable for the debts of a company, when they have committed an act of abuse of legal personality. According to the Brazilian Civil Code, abuse of legal personality occurs when there is commingling of assets or deviation from the corporate purpose. Bankruptcy Fraud If the victim of a fraudulent conveyance is the estate of an insolvent company, a creditor, the judicial admin - istrator or the Public Prosecutor’s Office may seek to claw back the assets of the transaction. Pursuant to Brazil’s Bankruptcy Law (Law No 11,101/2005) as amended, this can be achieved by means of the fol - lowing. Revocatory action This action can be brought by any creditor to ren - der a past transaction ineffective. It is predicated on the fraudulent behaviour of the debtor and the coun - terparty of the transaction, resulting in losses to the bankruptcy estate.
44 CHAMBERS.COM
Powered by FlippingBook