By: Vitor Ferrari and Ivan Kubala

The market for buying and selling companies (better known as M&A) is booming and in judicial recovery there are business opportunities with attractive values that guarantee greater security for those interested in acquiring shares or assets of a specific company or economic group.

This is because many companies undergoing judicial recovery resort to the sale of assets, which often comprise part of their operations, as an effective means of restructuring and maintaining their activities. In these cases, the combination of two factors is an attractive invitation to those interested in the acquisition. On the one hand, the values tend to be more attractive due to the financial situation of the selling companies, and on the other, the legislation provides greater security to the parties involved, such as:

(i) Irreversibility of the act – once the sale has been completed, any attempt to empty the assets will not harm the purchaser's rights (Art. 66-A of Law No. 11,101/05);
(ii) Absence of succession of the acquirers in the debtor's obligations, including, but not exclusively, those of an environmental, regulatory, administrative, criminal, anti-corruption, tax and labor nature (art. 66, paragraph 2, of Law No.
11.101/05);
(iii) Judicial supervision;

Furthermore, with the new rules included by Law No. 14,112/2020, in addition to the possibility of acquiring UPIs, which are nothing more than part of the establishment of companies under judicial recovery, it is possible to fully acquire the company (art. 50, item XVIII, of Law No. 11,101/05).

Despite the incentives that the legislation grants to acquirers, which eliminate concerns regarding liabilities and contingencies, which are very common in M&A transactions under normal operating conditions, the so-called “due diligence” and strict supervision of the judicial recovery process cannot be ruled out, mainly to monitor issues that may delay or obstruct the improvement of the transaction, as well as the financial situation of the UPI, in fact this is a part of the company that is in difficulty.

Therefore, given the peculiarities and complexities involved in M&A operations included in judicial recovery processes, it is important that both acquirers and sellers are always well advised financially and legally.

With the collaboration of Luiz Felipe Simões