By Vitor Antony Ferrari / Antonio Carlos C. Mazzucco

In the face of the current scenario of political and economic crisis imposed by misguided and populist public management, Brazilian companies and their administrators have been facing numerous difficulties in fulfilling their obligations to their creditors, be they suppliers, financial institutions and even their employees, especially Microenterprises and Small Businesses.

In general terms and before we even delve into the subject, we would like to point out that the Micro and Small Business Law, established in 2006, establishes the gross revenue of companies as a criterion for the regime. Thus, it is defined that a Microenterprise will be a business corporation, a simple corporation, a limited liability individual company and an entrepreneur, duly registered with the competent bodies, who earns gross revenue equal to or less than R$$ 360,000.00 each calendar year.

If the Company's annual gross revenue is greater than R$360,000.00 and equal to or less than
R$ 3,600,000.00, the company will be classified as a Small Business. These values refer to revenues obtained in the national market. The small business will not lose its classification if it obtains additional export revenues, up to the limit of
R$ 3,600,000.00.

Returning to the subject, in a not so distant past, the financial crisis experienced by Brazilian companies inevitably resulted in 02 (two) alternatives, namely: a) the Concordat, which ended up being a liquidation of the Company's assets with the extension of the term for settling debts with unsecured creditors (or simply those who do not have any type of guarantee); and, b) bankruptcy, which was, and still is, broadly speaking, a collective execution.

These bitter remedies did not benefit or guarantee creditors the receipt of their credits, much less did they guarantee debtors the maintenance of their businesses and even their assets, often leading them to bankruptcy. Such insecurity and lack of fact often resulted in a domino effect, affecting all categories of the production chain of the affected companies, harming suppliers, employees and financial institutions.

With the necessary legislative evolution and updating, adapting and meeting the demands of financial institutions that were eager to have guarantees in order to sell their products (credit), the model adopted by the Decree-Law of 1945, and which lasted until 2005, was replaced by Law No. 11,101/2005, which revoked the Concordata institute, making the resolution of the debtor's problems less traumatic, as well as giving hope to creditors of receiving their credits.

The Judicial Recovery Law has its fundamental concept enshrined in its art. 47, which provides for the overcoming, maintenance and viability of the company and jobs. Thus, the aforementioned article provides that:

The purpose of judicial recovery is to make it possible to overcome the debtor's economic and financial crisis, in order to allow the maintenance of the production source, the employment of workers and the interests of creditors, thus promoting the preservation of the company, its social function and the stimulation of economic activity.

In this way, debtor companies now have the following possibilities to improve their activities, of which it is worth mentioning:

• Extension of the term or review of payment conditions, in which the chance of reorganization is represented by a reduction in the value of debts or an increase in the due date. This is the method that most closely resembles the preventive bankruptcy institute, differing in that it binds creditors in general and not only unsecured creditors, as occurred in the bankruptcy; absence of maximum terms and minimum percentages in judicial recovery.

• Corporate operations – spin-off, incorporation, merger, transformation – with the debtor being responsible for contextualizing them in an economic plan that shows how their implementation could lead to the conditions for the recovery of the activity.

• Total or partial change in corporate control. In the first case, the controlling power is sold; in the second, a new partner is admitted to the controlling block.
• Restructuring of administration, since generally, the reason for economic difficulties is the lack of conditions or competence for administrators to make personnel and expense cuts, modernize the business establishment or improve available resources.

• Transfer or lease of the establishment, which means the sale of the establishment to someone with better conditions to explore the same economic activity in a more competent manner, or the management of the economic activity passes into the hands of a lessor who is in better conditions to promote its recovery.

• Usufruct of a company, intended to transfer the management of the economic activity in crisis to someone more prepared and competent. The new manager becomes the usufructuary of the business establishment, reverting the fruits of its exploitation to his benefit.

Despite the benefits brought by the Recovery Law, the fact is that its practical application of the legislation for certain companies and entrepreneurs, especially Microenterprises and Small Businesses, was difficult to achieve, since they were required to adopt a Special Judicial Recovery plan.

This was due to the fact that the procedure before the Judiciary had, in addition to the high costs of the process, the option for a plan identical to that of the old concordat, which limited the means adopted for recovery to the installment payment of only unsecured credits, with the obligation to apply interest on the credits, even in a limited way, which would often not be the best form of recovery for the Microenterprise or Small Business.

Therefore, aiming to serve this group of companies that account for a large portion of the national GDP, as it has more than 9 million registered companies, Complementary Law 147/2014 was enacted, with the aim of granting these companies all the benefits of the Recovery Law.

In practical terms, Micro and Small Businesses can benefit from the use of a Special Recovery Plan, and can also adapt it in a way that brings them effective benefits for the continuity of their economic activity, the maintenance of jobs and the payment of their commitments within the deadlines established and approved by their creditors.

Thus, Micro and Small Companies, provided that the minimum requirements for filing for recovery are met (art. 48 of the law), may now subject all credits, regardless of class, existing on the date of the request even if not yet due, being allowed to offer a credit discount for receipt.

The Plan under the Special regime remains divided into 36 (thirty-six) monthly installments, but with a SELIC rate for updating the amounts, making it much more attractive than the previous system. Furthermore, the Special Plan will grant the benefit that the Micro or Small Business Owner will not need to hold a General Creditors' Meeting.

However, it is worth noting that if there is an objection to the plan from more than half of the creditors of any class, which must be computed under the terms of article 45, that is, a majority of credits and creditors in the real guarantee and unsecured classes, and a simple majority regardless of the credit value of the labor classes and Micro and Small Companies (a new class of creditors also inserted by LC 147/2014), the judge will deem the request inadmissible and will decree the bankruptcy of the company.

Therefore, it is important that Micro and Small Business Owners, when choosing the Special Plan procedure, are well supported by their patrons, who must always provide an overview of common interests with creditors, with the aim of ensuring that such an option is carried out.

Finally, the benefits brought by Complementary Law 147/2014 are not limited to those under Reorganization, but also bring advantages and differentiations to Micro and Small Business Owners who are creditors in Judicial Reorganizations. One of these benefits is the equalization of their right to vote in the Assembly not by the value of their credit (which normally prevented the creditor from making any decision in their interest) but rather “per head”. Their right to vote was valued, making them an important piece in the Judicial Reorganization board.

It is concluded that the changes were beneficial and allow better access to justice, business continuity and job maintenance.