The Preemptive Rights Of Creditors In The Judicial Recovery Plan

The Third Chamber of the Brazilian Superior Court of Justice (Superior Tribunal de Justiça - STJ) recently ruled1 that who did business with a company after its judicial recovery plan is granted takes precedence in the line of creditors, if the recovery is not feasible and it is converted into bankruptcy.

The special appeal in which the creditor sought the classification of its credits as post-petition claims (créditos extraconcursais) was partially granted by the STJ. The ordinary instances had decided that only the acceptance of the judicial recovery plan is not enough to make these credits post-petition claims as the preference only exists for credits contracted after the effective granting of the benefit.

The post-petition claims referred to in article 84 of Law No. 11,101, of February 9, 2005 (the Company Recovery and Bankruptcy Law)2 have preference in relation to the petition claims (créditos concursais), which are listed in the schedule set forth in article 83 of the same law. To the Third Chamber of the STJ the company is under recovery proceedings from the moment the judge grants the judicial recovery plan, so that the creditor in the case at hand is entitled to the claimed preference.

According to article 83 of the Company Recovery and Bankruptcy Law, the petition claims will apply in the following order of preference:

labor credits up to 150 (one hundred and fifty) current minimum wages per creditor and those deriving from occupational accidents, which are also subject to the same limit per creditor3; credits guaranteed by rights in rem up to the value of the encumbered property; tax credits, independent of their nature, except for tax-related fines; credits with special rights4; credits with general rights5; ordinary credits, which are: (a) those not provided in the other items of this article; (b) balance of credits not benefiting from the sale of the assets linked to their payment; and (c) balance of credits deriving from labor laws and regulations exceeding the limitation set forth in item (i) above; credits regarding penalties for noncompliance of contracts; tax penalties and pecuniary penalties for violation of criminal and administrative laws; and subordinated credits, which are: (a) those regarded as such under any law or agreement; and (b) credits of partners and officers without an employment relationship. It is also important to mention article 67 of the Company Recovery and Bankruptcy, which states that the claims...