By: Vitor Antony Ferrari and Ivan Kubala

The confirmation by the Court of Justice of Rio de Janeiro of the bankruptcy of MMX Mineração e Metálicos, Eike Batista's mining company, made headlines in the main newspapers last week, especially after an agreement was announced in March with China Development Integration Limited (CDIL) that provided for an investment of approximately US$$ 50 million in the famous businessman's companies.

Given its notoriety, this decision will certainly be the subject of case law regarding the application, or not, of the new rules introduced in Law No. 11,101/2005 by Law No. 14,112/2020, which came into force at the beginning of this year.

As explained in a recent article[1], as a rule, the new wording printed by Law No. 14,112/2020 will be applied immediately to all pending processes. However, like every rule, the aforementioned norm established some exceptions that are set out in its article 5.

In fact, the aforementioned provision provides that some rules will only be applicable to bankruptcies declared, including those resulting from convolution, after the law comes into effect (January/2021).

The aforementioned company (MMX) has been undergoing judicial recovery since 2019, therefore before the new law came into effect. If its bankruptcy had been declared last week, there would be no doubt about the full application of the new law. However, the decision issued last week merely confirmed the bankruptcy decree that had already been determined in 2019, which was suspended due to the appeal filed by the aforementioned mining company.

Given this singularity, there will certainly be discussion about the full application of the new law to the specific case, since some rules, more beneficial to the company in bankruptcy proceedings, such as the prohibition of extending the bankruptcy and its effects on partners, controllers and administrators (art. 82-A) and the extinction of obligations in a shorter period of time (art. 158, item V), will be sought by the Bankruptcy Estate, while others, harmful to certain creditors, such as the change in the order of classification of credits (arts. 83 and 84), will be avoided by the creditors of the bankrupt estate.

The decision will be made by the Court of Justice of Rio de Janeiro, resulting in an important precedent for similar cases. Therefore, monitoring the next steps and the outcome of the aforementioned case is extremely important for the legal community.

Our office has been closely monitoring cases such as the one reported here, being attentive to the application of the new law to specific cases, keeping its professionals up to date with the new legislation and with the case law that is still being constructed by the Judiciary.

[1] https://www.mazzuccoemello.com/aplicacao-intertemporal-das-alteracoes-na-lei-de-recuperacao-judicial/