By Vitor Antony Ferrari and Ivan Kubala                 

Bill (PL) 6229/05, which changes several rules of bankruptcy legislation, dates from the same year in which Law No. 11,101/05 came into force, which regulates judicial and extrajudicial recovery and bankruptcy, but due to the COVID-19 pandemic and its impacts on the national economy, its processing became urgent.

Thus, yesterday the Chamber of Deputies approved the text of the PL, which will now be analyzed by the Senate.

Among the changes proposed by the approved text, the following stand out:

• Possibility of including labor credits in the Extrajudicial Recovery and provided there is negotiation with the union, which is not permitted under current legislation;
• Payment of tax debts with the Union in a greater number of installments and with a reduction in the value of each installment;
• Submission of a judicial recovery plan by the creditor, with some conditions set out in the text;
• Ease of entering into financing contracts by the company undergoing judicial recovery, including with the guarantee of personal assets, provided that it is authorized by the competent judge;
• Possibility of extending the so-called Stay Period (period in which actions and executions against the company under recovery are suspended) for the same period of 180 days – this measure has already been adopted by Magistrates, but current legislation provides that this period is non-extendable.

It is true that the aforementioned proposal has received a wide range of criticism from legal professionals working in the area, but its processing has advanced and professionals must be aware of the proposed changes in order to adequately guide their clients.