The Third Panel of the Superior Court of Justice (STJ) recognized, in the judgment of Special Appeal 1.991.103/MT (REsp 1.991.103/MT), which took place in April, the limits of the judicial reorganization court's power to decide on restraints imposed in individual executions filed by out-of-court creditors and the (im)possibility of prohibiting restraints that fall on the debtor's assets after the legal period of suspension of executions against the company in reorganization, the so-called stay period.

In an interpretation of articles 6, paragraph 7-A, of Law 11,101/05, included in the 2020 reform, and the final part of article 49, paragraph 3, of the same law, established that "the jurisdiction of the reorganization court to suspend the constrictive act carried out as part of the execution of an extrajudicial credit is restricted to that which falls solely on capital assets essential to maintenance of the business activity (...) to be exercised only during the stay period."

According to the STJ's interpretation in the judgment of REsp 1.991.103/MT, based on this new provision, it would not be possible to speak of a universal court of judicial reorganization, insofar as it would not always have the power to decide on the legality of all the acts that affect the debtor's assets.

The jurisdiction of the judicial reorganization court, according to the decision in the special appeal, would be limited to examining:

  • attachments on capital goods (i.e. those directly used in the production chain) that are essential to the debtor's business; and
  • the stay period of the executions referred to in article 6, subsection II, of Law 11,101/05.

At the time, the importance of equalizing the interests of creditors was highlighted who, by legislative choice, are excluded from the effects of judicial reorganization, with the principle of company preservation: "once the stay period has expired, especially in cases where a judgment granting judicial reorganization is passed, giving rise to novation of all obligations subject to the judicial reorganization plan, it is absolutely necessary for the bankruptcy exempt creditor to have his claim duly equalized within the scope of the individual execution, and it is not possible for the reorganization court to continue, after such an interregnum, to obstruct the satisfaction of his claim, based on the principle of company preservation, which is not absolute."

The aim of Law 11,101/05 is to guarantee the recovery of effectively viable business activities, by removing unviable entrepreneurs from the market as quickly as possible.

The dependence on the assets of certain creditors (the equitable owners excluded from the judicial reorganization) coupled with the inability to meet their extrajudicial obligations, even after the restructuring of debts through the judicial reorganization plan, would even create doubts as to the debtor's economic viability.

In the words of the reporting judge, Marco Aurélio Belizze, "if even after the stay period has elapsed (and once the judicial reorganization has been granted), the maintenance of the business activity depends on the use of the asset, which, in truth, is not properly owned by the company, and the related creditor who owns it, on the other hand, does not have its debt duly equalized in any other way, this factual circumstance, in addition to showing a serious indication of the unfeasibility itself of the company's recovery, completely distorts the way in which the reorganization process was designed, emptying the legal privilege conferred on bankruptcy-exempt creditors, in an unreasonable benefit to the company in reorganization and the creditors subject to the judicial reorganization."

The precedent is quite important, especially for the credit market, as it seems to indicate a welcome limitation on the understanding that the principle of company preservation would override the rights and interests of creditors. This has sometimes been the line adopted even by the STJ to submit acts of asset constriction to the judicial reorganization court.[1]

The decision in REsp 1.991.103/MT reinforces the impossibility of recurrence of cases involving companies in judicial reorganization which, after the end of the stay period, indefinitely prevent the execution of claims or repossession of assets fiduciarily sold by their bankruptcy-exempt creditors.

It was not uncommon for the judicial reorganization court to reject the rights of non-subject creditors on the basis of the application of the principle of company preservation.

Accordingly, it seems to us that the STJ's understanding expressed in the special appeal mentioned above has given Law 11,101/05 the interpretation most in line with the legislator's objectives, adequately equalizing the interests involved in a judicial reorganization.

In any case, it is still too early to predict whether REsp 1.991.103/MT will lead the STJ to consolidate this position.

It is important to monitor future STJ decisions on the subject. New judgments on the limitation of the judicial reorganization court's jurisdiction to restrict freezes ordered by the courts in which individual executions of bankruptcy-exempt creditors are being processed and the possibility of repossession of capital assets after the end of the stay period will allow us to see whether there is a consensus in the court's understanding on this matter.

 

[1] For example, we cite Special Appeal 1.610.860/PB, decided by the Third Panel of the STJ, and Internal Interlocutory Appeal 1.692.612/RJ, decided by the Fourth Panel of the STJ