08/12/2020
By Vitor Anotny Ferrari and Ivan Kubala

Due to the COVID-19 pandemic and its impacts on the national economy, the processing of Bill (PL) 6229/05, which amends several rules of Law No. 11,101/05, which regulates Judicial and Extrajudicial Recovery and Bankruptcy, became urgent, which is why it was approved on August 27, 2020 by the Chamber of Deputies and forwarded to the Federal Senate, where it received No. 4458/2020 and was also approved on November 25, 2020.

One of the changes to the text consists of the express inclusion of the rural producer as an individual as eligible to request judicial recovery. This is a legislative milestone since Law 11.101, when enacted in 2005, was directed at regularly constituted Business Companies.

The topic, given its peculiarities, has been debated in the courts, whose discussion is limited to the legal requirement for the rural producer to register with the Commercial Board (formal requirement) and the initial term of counting the minimum period of 02 years of proven business activity.

In fact, in November of last year, the 4th Panel of the Superior Court of Justice, by a majority vote (3X2), established an important precedent in the sense that despite being a condition for the request for judicial recovery by the rural producer to be registered in the Public Registry of Commercial Companies of the respective headquarters, the exercise of rural activity for more than two years does not begin with said registration, allowing the rural producer to prove this requirement by any means permitted by law.

Therefore, Brazilian case law has been consolidating the understanding that (i) the registration of the rural producer is merely declaratory in nature; (ii) the two-year period of article 48 of the LFR does not need to be counted from the registration, and a previous period may be considered to fulfill this requirement; (iii) credits contracted before registration should also be covered by the judicial recovery.

The text of Bill 4,458 approved by the Senate, which has often followed the changes and understandings of Jurisprudence, already provides that a rural producer does not need to have been registered for two years with the Commercial Board to avail himself of judicial recovery (paragraph 3 of art. 48), in the same sense as the Superior Court of Justice has understood, in addition to allowing this group to present a special recovery plan, as long as its debt does not exceed R$4.8 million (art. 70 – A).

On the other hand, there are also requirements and limitations for this sector, such as, for example, the non-subjection of rural credit, provided for in Law No. 4,829/65, to the effects of judicial recovery (paragraph 7 of art. 49), which can be seen as an obstacle to rural producers who obtain resources through this type of financing.

Specifically regarding art. 21 of Law No. 4,829/65, mentioned in § 7 of art. 49 of the Law to be amended, apparently the credits controlled and covered by the following institutions would not be subject to the effects of the Judicial Recovery (cf. art. 7 of the same Law):

• Banco do Brasil SA (art. 7, item II);
• The Amazon Credit Bank SA and the Banco do Nordeste do Brasil SA (art. 7, item III);
• The National Bank for Economic Development – BNDE (art. 7, § 1, item I, letter “c”);
• Banks in which the States hold a majority of shares (art. 7, § 1, item II, letter “a”);
• b) Savings Banks (art. 7, § 1, item II, letter “b”);
• c) Private banks (art. 7, § 1, item II, letter “c”);

Therefore, credits aimed at promoting rural activity would be excluded from RJ.

However, this fact will probably bring confusion to the agricultural credit sector in general, since the Law, by not bringing or defining what is “renegotiation”, mentioned in § 8 of art. 49, which comes close in correct legal terms to the novation of credit between the financial institution and the debtor, will certainly cause a serious discussion on the subject, since the same § 8 of art. 49, subjects the non-renegotiated rural credit.

Thus, notably, cases in which financial institutions have not renegotiated such credits prior to the request for Judicial Recovery would be included as subjects, if Bill 4,458 is enacted into Law, and all those negotiated would be excluded.

In short, the legislator apparently gives the Courts the duty to verify whether or not rural credit will be subject to the effects of the Judicial Recovery, since they will have to assess on a case-by-case basis whether or not the planned “renegotiation” took place.

Furthermore, Bill 4,458, approved by the Senate, amends Article 11 of Law No. 8,929 of 1994, which specifically deals with the Rural Product Certificate with Physical Settlement, removing its subjection to the effects of Judicial Recovery, to the detriment of the debtor who will not be able to count on the renegotiation of such obligation, with the effective delivery of the product.

Despite all the expectations surrounding the issue, we must, however, await the presidential vote to assess whether the text will remain unchanged for this category or whether it will be subject to a veto that could result in substantial changes to the current legislative framework brought about by the amendments to the Recovery Legislation.