BRAZIL Trends and Developments Contributed by: Marcelo Lucidi, Henrique Forssell and Octaviano Duarte, Duarte Forssell Advogados
Duarte e 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
Who can apply for recognition in Brazil? A foreign representative is entitled to apply to Brazil - ian courts for the recognition of a foreign insolvency proceeding. As a rule, the application must be made to the court with jurisdiction over the main establish - ment of the debtor in Brazil. Similar to the UNCITRAL Model Law, foreign proceed - ings are collective judicial or administrative proceed - ings in a foreign state, including an interim proceed - ing, pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign authority, for the purpose of reorganisation or liquidation. Foreign representative means a person or body, including one appointed on an interim basis, author - ised in a foreign proceeding to administer the reorgan - isation or liquidation of the debtor’s assets or affairs or to act as a representative of the foreign proceeding. Does the application subject the foreign representative to the jurisdiction of the Brazilian courts? The new legislation provides that an application made to the Brazilian judge does not subject the foreign representative or the debtor, their assets and activities to the Brazilian jurisdiction, except with respect to the strict limits of the application. The Brazilian judge may authorise the foreign repre - sentative to distribute the assets of the debtor that are located in Brazil, as long as the creditors domiciled in Brazil are duly protected.
Leveraging Brazil’s New Cross-Border Insolvency Law for Enhanced Asset Recovery Efforts Law No 14,112/2020 modified several provisions of Law No 11,101/2005 (Brazilian Bankruptcy Law) con - cerning judicial reorganisation and bankruptcy (liqui - dation) proceedings. The new legislation largely incorporates the provi - sions relating to cross-border insolvency set forth in the UNCITRAL Model Law, including the recognition of foreign insolvency proceedings in Brazil and the co-operation with foreign authorities. Previously, the recognition of a judgment relating to a debtor’s foreign insolvency required homologation through the Superior Court of Justice. This procedure was time-consuming and faced the risk of denial on grounds of violation of public policy. However, with the recent reforms, the recognition of foreign proceedings is expected to be straightforward and fast. Since the new legislation came into force, foreign creditors and liquidators are starting to seek assis - tance from Brazilian courts to obtain recognition of foreign insolvency proceedings as a method to take possession of assets in Brazilian territory. At the same time, other foreign creditors have opted to rely on tra - ditional asset recovery measures available in Brazil, without seeking recognition. As discussed below, the best route will depend on the circumstances of the case.
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