By: Vitor Ferrari and Ivan Kubala

Judicial Recovery is a judicial procedure that has become increasingly common, and helps companies to overcome their economic crises, with an orderly renegotiation with creditors that is summarized in a Judicial Recovery Plan. 

However, what should you do when one of your debtors files a request for Judicial Recovery? 

Initially, it is essential that the Creditor is duly sponsored by a specialized lawyer familiar with the subject. 

Afterwards, the procedure for determining and confirming the credit is subject to the scrutiny of the Judicial Administrator, who is responsible for supervising the entire procedure and making the first contact with the creditors, by means of correspondence, so that each creditor is aware that their credit is subject to the effects of the Judicial Recovery, and so that they can confirm or disagree with the values presented therein. 

It is important to emphasize that if the creditor holds guarantees as a fiduciary owner of movable or immovable property, as a lessor, as an owner or prospective seller of property whose respective contracts contain an irrevocability or irreversibility clause, including in real estate developments, or as an owner in a sales contract with retention of title, his credit will not be subject to the effects of judicial recovery and the property rights over the thing and the contractual conditions will prevail, in compliance with the respective legislation. However, said Creditor may not, during the suspension period known as the “Stay Period”, carry out the sale or removal from the debtor's establishment of capital assets essential to his business activity.

If this is not the case, the Creditor will be subject to the effects of the Recovery, and must remain attentive to all steps taken in the process. 

Therefore, it is important that the Creditor checks the following points: 

• Whether the RJ request made by the Debtor complied with the legal requirements; 
• If the credit was listed in the Debtor's list of creditors for the correct amount; 
• Who is the Judicial Administrator appointed by the Court, if the recovery request is accepted and processed by the Court; 
• Separate the documents that prove ownership of the Credit held against the Debtor; 
• Attend all acts determined by the Court; 
• Analyze the Judicial Recovery Plan, and if applicable, present the appropriate objection within the legal term so that the Plan in question is submitted for evaluation by all Creditors before a General Meeting; 
• Actively participate in the Assembly act, as well as negotiate as much as possible so that your interests are achieved;
  

As can be seen, the Creditor must act promptly to ensure that his rights to his Credit are protected, without this resulting in even greater costs if late qualification is required, or even if he is surprised by the approval of a negotiation in which he had no participation whatsoever.  

Therefore, the work of experienced professionals with dedication to carrying out the work is essential for the procedure to have the expected effectiveness, which ultimately means preserving the interests and rights of the Client.