By Vitor Antony Ferrari and Ivan Kubala*

It is very common for large companies to have headquarters and assets in several countries, marketing their products and services all over the world. However, the internationalization of companies became a problem when, hit by financial crises, they filed for bankruptcy or judicial recovery. The big question was what was the limit of the jurisdiction of the judge responsible for the case, and whether there would be the possibility of national decisions having effects in foreign territory. 

In order to legislate on international cases and their peculiarities; to ensure greater legal certainty in international trade, and in the recovery or bankruptcy procedure itself; to maximize the value of the assets of transnational companies; and, above all, to allow corporate restructuring at an international level, a legal model was created based on reciprocity and international cooperation between States, in order to ensure that the effects of a judicial recovery or bankruptcy could reach other jurisdictions. 

This made it entirely possible for a multinational company in economic difficulty, or even its creditor, to ensure that the effects of a judicial recovery, for example, were felt in all states in which the company under recovery had assets or branches, allowing for its restructuring in general. 

In Brazil, the Model Law that introduced the possibility of transnational insolvency was adopted by Law 11,101 of 2005, which deals specifically with recovery and bankruptcy proceedings in the country. Thus, there is an express legal provision for how transnational insolvency proceedings involving Brazilian jurisdiction take place.

First, for the recognition of the foreign process on Brazilian soil, it is essential that the business corporation has assets or establishments in the country. Furthermore, it is necessary that the representative of the legitimate foreigner requests, before the

Competent Brazilian court, recognition of the process, presenting all documentation required by law.

It is acknowledged that the effects of the procedure requested abroad apply in national territory: suspension of ongoing executions, as well as the course of any prescriptions and, above all, the ineffectiveness of the transfer of assets from the assets of the business company without express authorization from the Brazilian Court and others expressly defined by law.  

However, it is important to emphasize that, even if the process is recognized in Brazil, not every foreign decision on the subject will produce effects, even if the main action was filed abroad. National legislation clearly states that only foreign determinations that do not contradict national legislation will produce effects in the country. 

The opposite is also entirely possible: a judicial recovery or bankruptcy filed in Brazil may have effects in other states, but it is necessary to request recognition of the Brazilian process abroad under the legislation in force in that location. Even though there is an international Model Law, each country has its own unique characteristics, requiring compliance with local specificities. 

The ordinary procedure of a bankruptcy or recovery process is complex, and it is important that the parties involved in the case are duly represented. In international cases, there is also a constant need to confirm the compatibility of decisions and requests with the laws of the States involved, increasing the degree of complexity of the work carried out. Therefore, professionals specialized in the area and with expertise in transnational insolvency are essential for the correct development of the process, so that the party is not harmed. 

(With the collaboration of Luís Felipe Meira M. Simão)