Brazil will open its doors for foreign rural investments

Dear readers,

How are you all doing?

This is just a small post to break this news: Brazil’s Minister of Finance has just announced that, within the next 30 days, we will open our market for foreign investors that are willing to buy rural lands in Brazil.

Up until now, Brazilian legislation severely restricts the amount of land (continuous or not) that foreigners can buy (only a few hectares). But that may change on the next days, following the Federal Government efforts to recover our economy.

Investors should be aware, though, that this subject is far from secure. Brazil’s Supreme Federal Court is still ruling over article 1º, §1º, of Law nº 5.709/71 regarding this subject on the “Ação Cível Originária 2.463” and “Arguição de Descumprimento de Preceito Fundamental 342”.

Also, since this is a very, VERY, sensitive matter to several civil organizations and political parties, it’s not clear that any change of the current legislation will survive if a left-wing government eventually rise to the power on the following years.

Quem disse que o Direito não pode ser Legal?

Share This:

Investors, beware! Judicial Recovery does not protect you from labor debts

Dear readers,

Hope you’re all well.

Today I’d like to address a particularly sensitive topic that, in my opinion, every single person who intends to invest in Brazil should be aware of: if your company faces a labor law legal suit, the limitation of liability won’t apply to the owners.

And now, since a recent decision from the 4th Chamber of Regional Labor Court, Third Region (TRT3), the novation promoted by the approval of a judicial recovery plan apparently doesn’t either.

Even though there’s a precedent of the same Court (Precedent nº 55/TRT3), and a well-established Superior Court of Justice case law, that the Bankruptcy Court has sole jurisdiction regarding the matter, the 4th Chamber ruled that, if the Plan doesn’t cover the owners personal properties, it’s fair game to proceed with the execution against them.

For more direct details, check this link.

Share This:

“Change the rules in the middle of the game?” STJ sees no problem at all!

Foreigner investors should be well aware of a Brazil’s Superior Court of Justice recent decision regarding secured creditors guarantees within the approval of judicial reorganization plan under Brazilian Bankruptcy Law.

One of the main competences of the Superior Court of Justice (STJ) is to uniform all infra-constitutional matter (with the exception of Labor Law issues), including Bankruptcy Law. And, recently, they were asked to interpret article 59 of Law nº 11,101/2005 (Bankruptcy Law), according to what the approval of the judicial reorganization plan implies a novation of previous credits and binds all creditors, without prejudice of the warranties provided at article 50, paragraph 1º, of the same statute.

Article 50, paragraph 1º, in its turn, says that, on the event of the transfer or disposal of an asset burdened with an in rem guarantee, such as mortgage or commercial pledge, the secured creditor must give express approval.

It follows that the judicial reorganization measures shall not affect the rights in rem of creditors without their express consent, even if the reorganization plan is approved by all the presents at the general creditor’s meeting.

That was changed by the recent decision of the Third Panel of Superior Court of Justice in Special Appeal nº 1,532,943 that deemed valid a provision that suppressed all secured and fiduciary guarantees of the credits subjected to the appellant’s judicial reorganization plan.

In other words, STJ has enforced a judicial reorganization plan clause that has extinguished both real and personal guarantees from creditors that agreed with the plan, that abstained from voting, and that voted against such measure.

That decision violated not only the mens legis, but also STJ’s own precedents, such as the Fourth Panel’s Special Appeal nº 1,326,888, and has created a gigantic problem to every other secured creditor in Brazil. A point that is only aggravated by our current political and economic scenario.

It’s, therefore, imperative to any foreign investor, willing to invest in Brazil, or, even more, to any foreign creditor to seek advise from their legal counselors regarding their current position within Brazilian companies, and to reassess the default risk of their debtors concerning that new jurisprudence.

Share This: