BRAZIL Trends and Developments Contributed by: Marcelo Lucidi, Henrique Forssell, Octaviano Duarte and André Marcassa, Duarte Forssell Advogados
Leveraging Brazil’s New Cross-Border Insolvency Law for Enhanced Asset Recovery Efforts On 24 December 2020, the President of Bra - zil signed Law No 14,112/2020, which modi - fies several provisions of Law No 11,101/2005 (Brazilian Bankruptcy Law) concerning judicial reorganisation and bankruptcy (liquidation) pro - ceedings. The new legislation came into effect in Brazil as of 23 January 2021. The new legislation largely incorporates the pro - visions 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 authori - ties. Previously, the recognition of a judgment relat - ing 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 viola - tion 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, for - eign creditors and liquidators are starting to seek assistance from Brazilian courts to obtain rec - ognition of foreign insolvency proceedings as a method to take possession of assets in Brazilian territory. At the same time, other foreign credi - tors have opted to rely on traditional asset recov - ery measures available in Brazil, without seeking recognition. As discussed below, the best route will depend on the circumstances of the case. Who can apply for recognition in Brazil? A foreign representative is entitled to apply to Brazilian 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 establishment of the debtor in Brazil. Similar to the UNCITRAL Model Law, foreign proceedings are collective judicial or adminis - trative proceedings in a foreign state, including an interim proceeding, pursuant to a law relat - ing to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign authority, for the pur - pose of reorganisation or liquidation. Foreign representative means a person or body, including one appointed on an interim basis, authorised in a foreign proceeding to administer the reorganisation 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 representative to distribute the assets of the debtor that are located in Brazil, as long as the creditors domiciled in Brazil are duly protected. What are the benefits of obtaining recognition in Brazil? Upon recognition of a foreign proceeding: • all execution proceedings against the debtor or property of the debtor are automatically stayed, subject to the provisions of the Bank - ruptcy Law;
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