TIMING IS OF THE ESSENCE FOR FOREIGN COMPANIES FILING JUDICIAL RECOVERY AND FOREIGN CREDITORS
Brazil is a challenging country. With the sixth largest economy in the world, it is a land of opportunities for those who are willing to learn more about its culture and institutions. Brazil has, in the past, been an obvious choice for multinational companies looking to expand their operations in Latin America. Unfortunately, over the last six years Brazil has faced an economic crisis which reached its climax at the end of 2015, a crisis which is yet to dissipate.
The county’s economic issues have created several cross-border insolvency issues and opportunities, some of which are often overlooked by foreign creditors. When it comes to foreign creditors, timing is of the essence. They must not wait to join the judicial recovery proceedings; otherwise they will be waiving critical leverage for a successful claim.
Brazil is a civil law country, and the Brazilian Bankruptcy and Recovery Law was inspired by the US Bankruptcy Code. A major improvement in the new law was the possibility for approval of negotiations on any type of liability, including tax and labour. The Brazilian Judiciary has exclusive jurisdiction over all assets within its territory, with very limited or no applicability of foreign judgements. There are no specific provisions concerning cross-border insolvency or foreign creditors (a bond is required for any foreign party in any lawsuit in the country, but such general requirement is not limited to judicial recovery or bankruptcy proceedings).
Jan-Mar 2017 issue
Licks Attorneys