Put: Victor Antony Ferrari, Ivan Kubala

If there is no possibility of maintaining a business activity, bankruptcy ends up being the judicial procedure for the immediate liquidation of the debtor, with the objective of reallocating any assets of the bankrupt company to other production chains. 

With the amendment of Law No. 11,101/05, the Brazilian bankruptcy procedure was abruptly modified, becoming the final option for companies that cannot continue to carry out their activity and wish to obtain a resolution to settle their debts with creditors, who will receive their credits with the sale of assets.  

In the Brazilian system, the bankrupt is the individual entrepreneur or the business corporation, not its partners. However, depending on the corporate model or the position held by the partner, the legal representatives of the bankrupt company may be subject to the procedural and professional limitations arising from the company's bankruptcy. 

The changes made by law 14.112/2020 revised the extinction of the bankrupt's obligations by reducing the minimum payment limit for unsecured creditors from 50% to 25% and, mainly, by stipulating that after the 3-year period has elapsed since the bankruptcy was declared and no longer after the bankruptcy is closed, the bankrupt may have his obligations extinguished by handing over the assets subject to bankruptcy. 

Thus, the new Brazilian corporate insolvency system, in addition to ending bankruptcy more quickly and also extinguishing the bankrupt's obligations after a certain period of time, also allows the bankrupt to return to entrepreneurial activities within a reasonable period of time (3 years after the bankruptcy is declared after the obligations are extinguished), in line with mechanisms to encourage re-entrepreneurship among entrepreneurs and business corporations. 

Therefore, if it is not possible to maintain activities, it is up to the entrepreneur to seek the extinction of his liabilities and his rehabilitation through the renewed bankruptcy procedure.