Advantages of Extrajudicial Recovery
According to data from CNJ and Serasa, from 2014 to 2016, there were 3,978 requests of Judicial Recovery and only 517 requests of Extrajudicial Recovery homologation. However, the recent positive results that were verified in the Extrajudicial Recovery fro large companies have been attracting attention.
Law 11.101/2005 – Extrajudicial Recovery and Bankruptcy Law – created, besides the known Judicial Recovery, the less known Extrajudicial Recovery.
According to data from CNJ and Serasa, from 2014 to 2016, there were 3,978 requests of Judicial Recovery and only 517 requests of Extrajudicial Recovery homologation. However, the recent positive results that were verified in the Extrajudicial Recovery fro large companies have been attracting attention.
It is the case of debt restructuring of R$2.2 billion from Grupo Triunfo, one of the largest operators of infrastrucuture in Brazil. This was done through the Extrajudicial Recovery Plan where 9 of 17 financial creditors of the company in 2017 joined. That guaranteed the continuation of activities without an intervention of a Judicial Administrator or any envolvement of any other type of creditor.
The Extrajudicial Recovery is, in fact, a debt restructuring. It can be understood as an Extrajudicial Agreement among the company that has the debt and some type of its creditors with the purpose of cooperation of the agents envolved, search for credit satisfaction, as well as maintenance of company’s activity.
In view of that, the financial crisis of the company, before goins directly to the Judicial Recovery, or stay in inertia, it is important to cogitate the viability of using the Extrajudicial Recovery as a strategic measure for restructuring the company.
The Extrajudicial Recovery is a legitimate alternative for a dialog among the company in crisis and its creditors, with the objective of reaching equilibrium os interests and reconstruct the business.
In various studies due to the 10th anniversary of the Law 11.101/2005 in 2015, it was found that the main success factor of the Judicial Recovery and the consequent bankruptcy of the company, the delay of the business entrepeneur to admit the crisis in the companyas well as the delay in providing actions to restructure financially. This way, what has been happening is the search of solutions only when the company is almost in bankruptcy state. This ends up with Judicial Recovery Plans with execssive rates and inbstallments with high amounts, and the consequence is less credibility of the company and thus actvities become not viable. That can cause Judicial Recovery in bankruptcy.
It is important to highlight the advantages of Extrajudicial Recovery instead of Judicial Recovery as as an alternative for the company preservation:
It is possible to negotiate partially, with the envolvement of only some types of creditors, where new payment conditions will be negotiated.
Promptness: the Extrajudicial Recovery is not dependent on the Judicial system, so it is not affected by it slowness. It is important to mention the Extrajudicial Recovery Plan can or cannot be submitted to judicial homologation. It is only mandatory if there is not unanimity approval.
There is no envolvement of the Public Ministrynor a nomination of Judicial Administrator. It is avoided any external interference as well as the company’s exposition. That means less paperwork and honorary expenses.
Under the cost aspect, the extrajudicial alternative is more advantageousbecause the company can get rid of high costs of the judicial action which can impact in ita cash.
It is important to mention that the tributary credits and derivatives from Labour Legislation and from work accidents, are not submitted to Extrajudicial Recovery. Also excluded are: credits due to advancements from exchange rate contracts for exports.
We can conclude that Extrajudicial Recovery presents advantages and is an important tool for companies that are in delicate financial situation, but it can be over with renegotiation with certain types of creditors, specially when creditors are banks, financial institutions, and suppliers.
About The Author
Category: CONSULTATIVE AND ECONOMIC LITIGATION, Fabiola Polverini Reichert
Tags: advisory, advisory and economic litigation, correia dasilva advogados, csa, extrajudicial recoveryPosted in: 14/06/2019
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