By: Vitor Antony Ferrari and Ivan Kubala.

Extrajudicial Recovery is an option for many, but not all, companies experiencing economic difficulties.

The first major filter of RE is the fact that it is not suitable for all companies, but for those that still have some credibility, despite having a poor economic structure.

Today, less than 1% of RJ and bankruptcy requests are for out-of-court recoveries.

The second filter is the quality of the liabilities. If the liabilities are concentrated in a small number of creditors or in a few instruments, even if they have many creditors, it will be easier to initiate an out-of-court recovery. This is important because the debtor needs to go to the creditors to collect their signatures in order to have the plan approved. Many creditors require many signatures, which makes it difficult to obtain a minimum financial quorum.

It is important to note that, unlike Judicial Recovery, approval of the Extrajudicial Recovery plan does not depend on a minimum quorum of creditors; a minimum financial quorum is sufficient, which is also an advantage for the company. In addition, another positive point is the fact that RE deprives the company of the stigma of being in debt, saving its image, since the company is not widely exposed. In addition, there is the flexibility of the largest creditors to choose the best way for the procedure to be carried out. The ability to format the plan in a way that meets the interests of the largest creditors is a great advantage!

The third positive point concerns the relationship between the debtor company and its creditors. Maintaining a good relationship between the parties is of utmost importance, and whether we like it or not, the judicial environment is stressful. In a RE, the fact that the parties, by consensus, seek to resolve the situation administratively is much better.

The new law brought a series of benefits, such as the fact that attacks on the company's assets are mitigated, in order to preserve them. Clarity regarding the limits on the sale of the company's assets is also an important point, although there is no judicial ruling on this. At this point, it is believed to be something valid and plausible, although the jurisdiction has not yet taken a position on the matter.

The fact that labor creditors can be included in the out-of-court recovery plan is also an important change, although collective bargaining is not easy. Companies with good relationships with their employees are more successful in reaching an agreement.

In short, RE is extremely important, as it helps companies and creditors negotiate credits without litigation, enables the company to return to operating in a healthy manner and also preserves its image before society.

The debtor may select creditors, choosing those who effectively seek to participate in the RE, which makes it easier to resolve the problem. In addition, the automatic suspension of the possibility for creditors participating in the RE to file a lawsuit against the company is also an important change. As for creditors who did not participate, it is understood that they have this right, since they chose not to participate in the negotiation. However, if approved and included in the list of subject creditors, they will have to respect and accept the negotiation signed, except for the issue related to the guarantees linked to their credits.

Since there is no General Meeting of Creditors in a RE, it is common for negotiations to often take place in several meetings, with different creditors. Therefore, it is difficult to get a unanimous plan approved, and creditors often request changes in order to sign terms of adhesion. Due to the probable change in the recovery plan, it is essential that the company under recovery includes terms of compliance with the contract that maintain the creditor's acceptance, an example of this is including a clause on the margin of discount.

Additionally, clauses ensuring that changes to the plan that do not alter the creditor's right will not allow the creditor to withdraw are also essential, since the plan will likely be changed.

Finally, it is important to note that there is a possibility that the RE may be transformed into RJ. If the recovering party opts for the conversion, because it believes it will be more protected, it is possible, as well as if the RE is not approved by the Creditors or ratified by the Court, a fact that will not result in bankruptcy, but rather in a new procedure that may be used by the debtors to continue negotiating, now in light of a collective Plan that may be approved at the General Meeting of Creditors.

With the collaboration of Luís Felipe Meira Marques Simão.