By: Vitor Antony Ferrari, Ivan Kubala
The Judicial Recovery and Bankruptcy Law lists an exemplary list of means that companies can use in their recovery plan and preservation of their activities, among which the sale of assets stands out.
However, there are some rules that must be observed by companies undergoing recovery in order to ensure greater security for both creditors and purchasers of these assets.
After the distribution of the request for judicial recovery, the company may only sell assets from its non-current assets with judicial authorization, and it is also certain that creditors may meet to, complying with the requirements defined by law, request a resolution on the sale at a General Meeting of Creditors.
The law also provides for the possibility of alienation through Isolated Production Units, which may include goods, rights or assets of any nature, tangible or intangible, individually or together, including shareholdings of partners.
It is important to note that, despite the greater flexibility and scope of the rules inherent to the sale of assets, the new provisions included by Law No. 14,112/20 brought greater security to the creditors of the company under judicial recovery and to the purchasers of the assets, for the following reasons:
- Once the sale is completed, the act becomes irreversible, so that any attempt to empty the assets will not harm the purchaser's rights (Art. 66-A of Law No. 11,101/05);
- If an attempt to empty assets is characterized, the judicial recovery may be converted into bankruptcy (art. 60-A, sole paragraph, and art. 66, paragraph 4, of Law No. 11,101/05);
- The sale, provided that it is authorized by court order, will be free of any encumbrance and there will be no succession of the purchaser to the debtor's obligations, including, but not limited to, those of an environmental, regulatory, administrative, criminal, anti-corruption, tax and labor nature (art. 66, paragraph 2, of Law No. 11,101/05)
Finally, it is worth noting that there has also been a change in the methods of selling these assets. While the previous wording provided for selling by auction, sealed bids or auction, the new provisions have become more modern in order to allow for electronic, in-person or hybrid auctions and other competitive processes duly outlined and approved under the terms of the law.
Furthermore, all the modalities provided for in the law are considered judicial alienations in order to exclude the purchaser's succession to the debtor's obligations, while in the previous wording the alternative forms, not provided for in the law, excluded this protection.