By Mariana Martins and Marcelo Blecher

On 11/29/2019, Ordinance PGFN 11,956/2019 was published in the Official Gazette of the Union, which regulates the transaction in the collection of active debt at the federal level, provided for in Provisional Measure (“MP”) 899/2019, called by the Government the MP of the Legal Taxpayer.

According to the aforementioned Ordinance, for those taxpayers who are in the process of judicial recovery, at a later stage than the moment referred to in art. 57 of Law 11.101/2005[1] (approval of the recovery plan), is permitted, within a maximum period of 60 (sixty) days from the publication of the Ordinance, that is, until next 01/30/2020, the submission of an individual transaction proposal to the National Treasury Attorney General's Office (“PGFN”), provided that the following conditions are met:

• the) the maximum term for settlement of the tradable liabilities must be up to 84 (eighty-four) months, being up to 100 (one hundred) months in the case of an individual entrepreneur, ME or EPP in judicial recovery;
• b) the maximum limit for reducing fines and interest will be up to 50% (fifty percent), and may reach up to 70% (seventy percent) in the case of an individual entrepreneur, ME or EPP in judicial recovery;
• w) the transaction will also be limited by the median percentages of extension of terms and discounts offered in the judicial recovery plan in relation to the credits subject to it, and for the purposes of observing this limit, the unilateral modification of the transaction term by the PGFN is authorized in the event of a subsequent change to the judicial recovery plan offered to creditors or approved by them under Law 11,101/2005; and
• d) possibility of granting a deferral, for a maximum period of 180 (one hundred and eighty) days, counted from the formalization of the transaction agreement and payment of the agreed down payment.

Among other requirements set forth in the Ordinance, it is worth highlighting the wording of art. 41, sole paragraph, which determines that the passive subject in judicial recovery who transacts with the Public Treasury is obliged to demonstrate the absence of prejudice to the fulfillment of the obligations contracted with the execution of the transaction in the event of alienation or encumbrance of assets or rights forming part of the respective non-current asset.

Finally, it should be emphasized that one of the hypotheses for termination of the transaction is the non-compliance with the conditions, clauses, obligations or commitments assumed, and in the event of termination, the Public Treasury is authorized to request the conversion of the judicial recovery into bankruptcy or to file a bankruptcy action, as the case may be.

The Mazzucco & Mello Advogados tax team is available to provide any clarification on this topic.

[1] Art. 57. After the plan approved by the general meeting of creditors has been attached to the records or after the period provided for in art. 55 of this Law has elapsed without objection from creditors, the debtor shall present negative certificates of tax debts in accordance with arts. 151, 205, 206 of Law No. 5,172 of October 25, 1966 – National Tax Code.