To request the recovery of an economic group – judicial reorganization in active joinder of parties –, each member business entity must individually prove operation for more than two years, as required by Article 48 of the Bankruptcy Law.
This interpretation was given by the Third Panel of the Superior Court of Justice (STJ) when adjudicating a controversy related to the reorganization requested by three companies of the same group.
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Recovery of an economic group
At first instance, the reorganization court granted the request for two of the companies and denied it for the other, on the understanding that the latter did not have the minimum of two years of incorporation – which would be a legal impediment.
The rapporteur of the appeal at the STJ stated that, in the case of an economic group, each of the companies must demonstrate compliance with the temporal requirement of two years, “for they retain their individuality and, consequently, present a legal personality distinct from the other members of the said collectivity”.
Legal gap
According to the rapporteur Justice, the Bankruptcy Law does not regulate the possibility of joint submission of the judicial reorganization request by companies that are part of a given economic group and, therefore, does not address the formation of active joinder of parties in such cases.
However, the Bankruptcy Law itself, in Article 189, provides for the subsidiary application of the Code of Civil Procedure to reorganization and bankruptcy proceedings, there being still other provisions that refer to the use of the ordinary procedure regulated in the CPC.
“In this context, several legal scholars maintain the possibility of the request for recovery being formulated by an economic group, given that the rules regarding the joinder of parties inserted in the CPC do not, in turn, prove to be incompatible with the reorganization and bankruptcy process”, the Justice explained.
Union of efforts
According to the rapporteur, the usefulness of the active joinder of parties in the reorganization becomes clear when one takes into account that multi-corporate business organizations are “characterized by contractual interconnections with cross-cutting responsibilities, arising, in theory, from the need to unite efforts with the purpose of obtaining greater profit, reducing costs and increasing participation in an increasingly complex and competitive market”.
The rapporteur explained that the admission of active joinder of parties in judicial reorganization obeys two sets of factors: the interdependence of the corporate relationships formed in economic groups and the need to simultaneously overcome the situation of economic-financial instability; and the authorization of the civil procedural legislation for the parties to litigate jointly in the same process, there being no collision with the principles and foundations of the Bankruptcy Law.
Peculiar situation
The rapporteur observed that the two-year period provided for in Article 48 of the Bankruptcy Law has as its main objective to restrict the granting of recovery to business entities that are consolidated in the market and present a certain degree of economic-financial viability, capable of justifying the sacrifice imposed on the creditors.
In the case analyzed by the Third Panel, one of the entities that were members of the group was the result of the partial spin-off of another and did not meet the requirement of more than two years of incorporation to be entitled to recovery, which is why the judge denied its request at first instance.
Upon examining the peculiarities of the case, the panel, unanimously following the vote of the rapporteur, set aside the rigidity of the understanding regarding Article 48 to allow recovery also for the company resulting from the spin-off.
Succession
For the Justice, it is uncontroversial that the new company had not fulfilled the period of two years of regular exercise of business activity, “a circumstance that would, in theory, exclude it from the possibility of requesting judicial reorganization”.
However, the company from which the new entity originated had been operating regularly for more than two years. In the spin-off process, several stores were transferred to the new company, almost all of which had also been incorporated more than two years earlier.
In the Justice’s view, the company whose recovery was denied wholly succeeded in rights and obligations other entities that had a period of regular operation exceeding that required by the Bankruptcy Law, that is, both the assigning entity and the stores that came under the command of the new company fulfilled the legal two-year period.
“It is worth emphasizing that the spin-off did not cause a change in the corporate purpose, nor an interruption of the business activities, of either the assigning entity or the spun-off entity”, the rapporteur concluded.
Source: STJ
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