Put: Victor Antony Ferrari, Ivan Kubala

Despite being an important tool for overcoming a temporary economic and financial crisis, judicial recovery is only achieved with a lot of effort and dedication by the companies that use this instrument, which go through a long path of negotiations, planning, projections, in short, full of obstacles to achieve the much-desired approval of the judicial recovery plan. 

Thus, the judicial recovery plan, which basically consists of a collective agreement between the debtor and creditors, and which will define the means of recovery of the company in crisis and, mainly, the payment conditions of its creditors, is prepared considering several factors, and is the main instrument of judicial recovery. 

However, before putting it into practice, it must be approved by creditors at a Meeting and, subsequently, be ratified by the Judge conducting the recovery process. 

Therefore, in theory, the plan only begins to be implemented after judicial approval, and its rejection or non-compliance can generate drastic consequences for the company undergoing judicial recovery, such as, for example, its bankruptcy. 

However, provisional compliance with the judicial recovery plan has been frequently determined. In this case, despite the plan having been approved by creditors, without foreseeing the satisfaction of all the requirements necessary for approval, the Judges have determined provisional compliance with the plan. 

It turns out that, on the one hand, this situation, in addition to contradicting the very system of Law No. 11,101/05, according to which the approval of the plan is essential for its effective compliance, has generated real legal uncertainty for all those involved in the recovery process, both creditors and debtor companies, and also potential investors. 

This situation consists of a true limbo in which there is an approved plan, not ratified, but whose compliance was provisionally determined by the Judge, generating true distrust in all those involved and delaying the implementation of the recovery means essential to the company's restructuring plan.  

In effect, it may remove incentives for partners and collaborators who were willing to help with the company's recovery plan. For example, this situation hinders the holding of auctions for the sale of assets, to the extent that this “limbo” represents a real risk that investors interested in acquiring Isolated Production Units – UPIs, for example, tend not to assume in the face of an uncertain and insecure scenario. 

Furthermore, given the non-approval of the judicial recovery plan, there is no certainty regarding the novation of credits subject to judicial recovery, so that payment of creditors in this period of uncertainty generates real insecurity and confusion in the recovery procedure. 

On the other hand, this situation can be seen as a chance for the company in recovery to correct some pending issue or fulfill some requirement without which the approval of the plan would not be possible. In any case, this type of situation should be avoided because, at first glance, it reflects more negatively than positively.  

It is therefore important to have the support of professionals with extensive experience in the area who can anticipate these situations, adopting preventive measures, or who can suggest measures to mitigate the harmful effects of a decision such as the one mentioned above.