News June 27, 2019

Court Rules Execution Extinct Against Company in Judicial Reorganization

The 14th Chamber of Private Law ruled enforcement against a company under judicial reorganization extinguished, the enforcement having been brought by a banking institution. The decision was rendered by unanimous vote.

The case file shows that the business entity was granted the processing of a reorganization in 2017, and the bank, a creditor for R$ 2.7 million, brought an enforcement action to secure receipt. The judgment recognized a credit of R$ 275 thousand, resulting from the early maturity of the debt, but the company appealed, claiming that it was current on payments.

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For the rapporteur of the appeal, Appellate Judge Carlos Henrique Abrão, although a clause in the contract provides for the early maturity of the debt as of the reorganization request, the conduct adopted by the bank aims exclusively to secure its own credit, to the detriment of the company’s recovery and of equal treatment among creditors.

“At the most acute moment of the crisis, of the asphyxiation of credit, instead of financial institutions opening their eyes to renegotiate the debts or to inject new money, they recalcitrantly take refuge in an abusive contractual clause,” the magistrate stated. “The early maturity of the debt loses substance, as a result of the reorganization-based novation, in two respects: first, the payment being current; and second, the credit being classified in the list of creditors made available by the very reorganization Court in charge of the individual enforcement,” he concluded, ruling the enforcement extinguished and ordering the release of the blocked amounts.