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The prevalence of financial capital in Brazilian bankruptcy law

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ORIGINAL ARTICLE

MORAES, Ricardo Paiva Baptista de [1]

MORAES, Ricardo Paiva Baptista de. The prevalence of financial capital in Brazilian bankruptcy law. Revista Científica Multidisciplinar Núcleo do Conhecimento. Year. 07, Ed. 04, Vol. 04, pp. 169-178. April 2022. ISSN: 2448-0959, Access link: https://www.nucleodoconhecimento.com.br/law/brazilian-bankruptcy-law ‎

ABSTRACT

Decree-Law No. 7661/45 was until 2005, when Law No. 11101/05 was enacted, the device that regulated the Brazilian bankruptcy law. In 2020, there was a new amendment through Law No. 14,112/20, which revoked some articles of Law 11,101/05 and added new ones. The three historical devices created the legal framework on the subject, with its positive and negative sides. The question that will be discussed in this paper is: over time, has Brazilian bankruptcy law been able to balance the power of large credit holders and the protection of small creditors in judicial reorganizations and bankruptcies? The purpose of the article is, therefore, to discuss whether there is effectively a balance between the power of large creditors and the protection of holders of smaller credits and whether this scenario needs to be modified in some way. For this purpose, theoretical and descriptive research was used, developed through a bibliographic review and document analysis, notably Decree-Law nº 7.661/45, Law nº 11.101/05 and Law nº 14.112/20, in order to enable the perception of legislative evolution on the subject over time. When carrying out research on the different devices that regulated Brazilian law, it becomes noticeable the need to better adapt the rules in order to effectively protect holders of smaller credits, as this matter has been largely ignored throughout legal national history.

Keywords: Bankruptcy Law, Economic Imbalance, Financial Capital, Social Justice.

1. INTRODUCTION

It will be shown that there is a latent need to discuss the following: has bankruptcy law been able to maintain, over time, a balance between the power of large credit holders and the protection of small ones in situations of judicial recovery and bankruptcy?

The final objective of this research will therefore be to discuss whether there is effectively a balance between the power of large creditors and the protection of holders of smaller credits and whether this scenario needs to be modified in some way.

This is a theoretical and descriptive research of doctrines and analysis of legal norms, specifically Decree-Law nº 7.661/45 (BRASIL, 1945), Law nº 11.101/05 (BRASIL, 2005) and Law nº 14.112/20 ( BRAZIL, 2020).

With the examination it will be possible to perceive how the legal system has been changing over time in some aspects, and how it was still static with regard to the protection of minor creditors.

2. HISTORICAL ORIGIN

The institution of bankruptcy was already discussed in the Middle Ages. On the subject, Professor Tarcisio Teixeira (2016, p. 340) points out:

A falência na Idade Média estendia-se a todo tipo de devedor (comerciante ou não) 215. Naquela época, a falência era considerada como um delito, acarretando penas que variavam de prisão à mutilação do devedor. Surge nessa época a origem do vocábulo “falência”, do verbo latino fallere, que significa enganar, falsear.

The first years of the Brazilian republic were highly turbulent. The economic crisis caused by the encilhamento was a good example of what happened in the period. The scrambling undertaken by Marechal Deodoro da Fonseca generated serious inflation and loss of economic power. The policy, in the words of Boris Fausto (2007, p. 252) occurred as follows:

Ao assumir o Ministério da Fazenda do governo provisório, Rui Barbosa baixou vários decretos com o objetivo de aumentar a oferta de moeda e facilitar a criação de sociedades anônimas. A medida mais importante foi a que deu a alguns bancos a faculdade de emitir moeda. O papel fundamental coube ao banco emissor do Rio de Janeiro, o Banco dos Estados Unidos do Brasil, dirigido por um dos grandes empresários da época, Francisco de Paula Mayrink.

As iniciativas de Rui Barbosa concorreram para expandir o crédito e gerar a ideia de que a República seria o reino dos negócios. Formaram-se muitas empresas, algumas reais e outras fantásticas. A especulação cresceu nas bolsas de valores e o custo de vida subiu fortemente.

No início de 1891 veio a crise, com a derrubada do preço das ações, a falência de estabelecimentos bancários e empresas. O valor da moeda brasileira, cotado em relação à libra inglesa, começou a despencar.

(…)

It is not difficult to imagine the possible serious consequences that such acts could have on the entire economic and business sector of the country.

3. DECREE-LAW No. 7.661/45: FORMER BANKRUPTCY LAW

Deserving of outstanding importance in the Brazilian legal system is Decree-Law No. 7661 (BRASIL, 1945), enacted by President Getúlio Dornelles Vargas, bringing many novelties for the time. Along these lines, Tarcisio Teixeira (2016, p. 342) states that:

Para melhor entendermos o Direito Falimentar, é válido fazermos um apanhado geral do Decreto-lei n. 7.661/45, em razão de sua relevância no Brasil. Tal decreto cuidava da falência e concordata, dispondo, em seu art. 1º, que era considerado falido o comerciante que, sem relevante razão de direito, não pagasse no vencimento obrigação líquida, constante de título que legitimava a ação executiva. O sentido da palavra “comerciante” abarcava aqueles que praticavam os atos de comércio, não se devendo esquecer que a teoria dos atos de comércio era a adotada pelo Código Comercial de 1850. Ato de comércio equivalia à compra com a intenção de revender (no mesmo sentido do art. 110-1 do Código Comercial francês), além de algumas outras atividades, como a bancária e a securitária. A lei vigorou até o século seguinte quando finalmente foi revogada pela lei 11.101 de 2005.

The figure of the liquidator, a more primitive Judicial Administrator, had the function of acting as a supervisor and assistant to the court. Decree-Law 7661 prescribed, in Articles 59 and 60, that bankruptcy administration would be exercised by a liquidator, chosen from among the bankrupt’s largest creditors, resident or domiciled in the bankruptcy court, of recognized moral and financial suitability (BRASIL, 1945).

From the command of the article, it can already be seen that there was a restriction on the choice, that is, the trustee would necessarily be a creditor, which over time was perceived as one of the problems to be solved, since such an important job should be more professionalized, there would not necessarily be someone on the list of creditors with sufficient qualities to carry out this arduous task.

Added to this, there is another serious problem that can already be verified: the positivization of the privilege to the big creditor. If the trustee was a creditor, it would be difficult for him to have the necessary impartiality to manage the estate and proceed with the payment of credits fairly, and since he is a major creditor by command of article 60 (BRASIL, 1945), the possibility of benefiting his peers tends to be bigger.

The syndic’s powers were reasonably broader than those of the present day. At that time, there was no committee of creditors to supervise and give an opinion on the progress of the process, so that centralization in the administrator was more evident, in order to have less brakes on his possible partial performance.

4. LAW 11.101, OF FEBRUARY 9, 2005

The law made the creation of the judicial administrator official. The device is modern and innovative, but still subject to several vices that still have to be remedied in the next legislative changes, especially related to the central theme of the article.

4.1 HISTORICAL CONTEXT

There was a need to create a more conducive environment for business and with a better defined order. It is also important to highlight the serious inflation and economic crisis that the country was facing, which led many businessmen to bankruptcy. Bóris Fausto asserts that, “unfortunately, the facts did not give way to optimism. Inflation grew to frightening levels, making Brazil the Latin American inflation champion and one of the first in the world” (FAUSTO, 2007, p. 556).

However, the new law continued to weigh heavily against the less favored, such as giving considerably more voting power to the largest credits, as will be demonstrated below.

The declaration of bankruptcy of the business activity is in many cases necessary to protect society. Entrepreneurs in financial difficulties sometimes hide this from their suppliers and continue hiring on credit even knowing that they will not be able to afford the cost. If there is no intervention in the company, the number of victims tends to increase.

It must also be remembered that not every business society can or should be recovered. Fábio Ulhoa Coelho (2011, p. 413) points out that:

(…) somente as empresas viáveis devem ser objeto de recuperação judicial (ou mesmo a extrajudicial). Para que se justifique o sacrifício da sociedade brasileira presente, em maior ou menor extensão, em qualquer recuperação de empresa não derivada de solução de mercado, o empresário que a postula deve se mostrar digno do benefício. Deve mostrar, em outras palavras, que tem condições de devolver à sociedade brasileira, se e quando recuperado, pelo menos em parte o sacrifício feito para salvá-la.

4.2 OF THE JUDICIAL ADMINISTRATOR

The emergence of a business activity is exhaustively dealt with in normative devices. In this sense, with regard to its extinction, one should not forget the analysis of the figure of the trustee, in accordance with the provisions of Law 11.101, of February 9, 2005, in the following terms (BRASIL, 2005):

Art. 21. O administrador judicial será profissional idôneo, preferencialmente advogado, economista, administrador de empresas ou contador, ou pessoa jurídica especializada.

Parágrafo único. Se o administrador judicial nomeado for pessoa jurídica, declarar-se-á, no termo de que trata o art. 33 desta Lei, o nome de profissional responsável pela condução do processo de falência ou de recuperação judicial, que não poderá ser substituído sem autorização do juiz.

Art. 22. Ao administrador judicial compete, sob a fiscalização do juiz e do Comitê, além de outros deveres que esta Lei lhe impõe:

I – na recuperação judicial e na falência:

a) enviar correspondência aos credores constantes na relação de que trata o inciso III do caput do art. 51, o inciso III do caput do art. 99 ou o inciso II do caput do art. 105 desta Lei, comunicando a data do pedido de recuperação judicial ou da decretação da falência, a natureza, o valor e a classificação dada ao crédito;

b) fornecer, com presteza, todas as informações pedidas pelos credores interessados;

c) dar extratos dos livros do devedor, que merecerão fé de ofício, a fim de servirem de fundamento nas habilitações e impugnações de créditos;

d) exigir dos credores, do devedor ou seus administradores quaisquer informações;

e) elaborar a relação de credores de que trata o § 2º do art. 7º desta Lei;

f) consolidar o quadro-geral de credores nos termos do art. 18 desta Lei;

g) requerer ao juiz convocação da assembléia-geral de credores nos casos previstos nesta Lei ou quando entender necessária sua ouvida para a tomada de decisões;

h) contratar, mediante autorização judicial, profissionais ou empresas especializadas para, quando necessário, auxiliá-lo no exercício de suas funções;

i) manifestar-se nos casos previstos nesta Lei.

The main goal of any recovery is to overcome the financial crisis of those who requested it, as expressly prescribed in article 47 of Law 11,101/2005 (BRASIL, 2005):

Art. 47. A recuperação judicial tem por objetivo viabilizar a superação da situação de crise econômico-financeira do devedor, a fim de permitir a manutenção da fonte produtora, do emprego dos trabalhadores e dos interesses dos credores, promovendo, assim, a preservação da empresa, sua função social e o estímulo à atividade econômica.

Thus, it should be mentioned that every business activity is not just a legal entity, but a set of lives and jobs. Therefore, when dealing with economic recovery, it is about maintaining jobs and a source of income for the people who depend on it.

Therefore, the way in which the recovery is carried out is important, as it is always necessary to think about the most vulnerable. A recovery that benefits the company and large creditors and harms minors should not be sought and the law should have mechanisms for this protection.

4.3 JUDICIAL REORGANIZATION PLAN

The judicial reorganization plan is the means provided for in Brazilian bankruptcy law to recover a company before it enters bankruptcy, in accordance with article 53 of Law 11.101/2005 (BRASIL, 2005):

Art. 53. O plano de recuperação será apresentado pelo devedor em juízo no prazo improrrogável de 60 (sessenta) dias da publicação da decisão que deferir o processamento da recuperação judicial, sob pena de convolação em falência, e deverá conter:

I – discriminação pormenorizada dos meios de recuperação a ser empregados, conforme o art. 50 desta Lei, e seu resumo;

II – demonstração de sua viabilidade econômica; e

III – laudo econômico-financeiro e de avaliação dos bens e ativos do devedor, subscrito por profissional legalmente habilitado ou empresa especializada.

The trustee is responsible for overseeing the judge, including the correct fulfillment of the court-supervised reorganization plan. Thus, in the words of Fábio Ulhoa Coelho,

(…) O administrador judicial é o agente auxiliar do juiz, que, em nome próprio (portanto, com responsabilidade), deve cumprir com as funções cometidas pela lei. Além de auxiliar do juiz, o administrador judicial é, também, o representante da comunhão de interesses dos credores (…) (COELHO, 2011, p. 369).

Judicial recovery is the most delicate moment regarding the topic of the prevalence of economic power to the detriment of small credits.

According to article 38 of Law 11.101/2005, the creditor’s vote, as a rule, is proportional to the value of his credit (BRASIL, 2005). This device is the biggest problem of the entire discussion of this work: linking voting to financial power.

Despite going through several regulatory changes over the century, the addiction to benefiting large economic capital was not only not resolved, but was legally reinforced, since the greater the voting power, the greater the influence on the entire coming process with regard to credits arising from business agreements.

5. LAW 14.112/20: NEW CHANGES

After analyzing the historical evolution and the challenges faced throughout the process, it is necessary to answer the question that has been widely discussed since the 1945 decree-law. Will it finally be possible to reconcile the protection of business activity to the detriment of financial capital?

Initially, it must be said that there was no repeal of Law No. 11,101 of 2005, but an update in some articles. A standard that may be representative of a certain advance in relation to the matter is enshrined in article 56, caput and paragraph 4 (BRASIL, 2020), in verbis:

Art. 56. Havendo objeção de qualquer credor ao plano de recuperação judicial, o juiz convocará a assembleia-geral de credores para deliberar sobre o plano de recuperação.

§4º Rejeitado o plano de recuperação judicial, o administrador judicial submeterá, no ato, à votação da assembleia-geral de credores a concessão de prazo de 30 (trinta) dias para que seja apresentado plano de recuperação judicial pelos credores.

The secret to the success of a good recovery is the proximity between debtors and creditors. As much as they are in different poles, the objective is the same: debt payment. When this innovation was thought of, the intention was to give the debtor one more chance, since in the old diploma, if there was a rejection of the judicial recovery plan, bankruptcy would be decreed.

It is common knowledge that bankruptcy is the worst situation for everyone involved. The chance of a bankrupt estate not paying its debts is very high. If creditors find the plan unfeasible, opening up the possibility for them to come up with a better option is extremely welcome.

However, the problem is that the response regarding the conciliation between the protection of business activity and the great economic power remains negative.

The voting system provided for in Article 39 of Law 11,101 of February 9, 2005 has not been changed. Some devices present in paragraphs suffer effects, however the weight of credit in the vote did not change. Therefore, there is still the vice of benefiting those with greater credit.

In this way, there will most likely continue to be plans that exclusively benefit the holders of the largest credits to the detriment of the smallest, regardless of how important it is for small suppliers to receive the amount owed to them so that they can maintain their business activities.

6. CONCLUSION

Given the above and answering the guiding question of this study, it is possible to conclude that Brazilian law has failed to balance the power between large credit holders and small creditors in judicial reorganizations and bankruptcies. The research showed that over the years there was no protection for smaller creditors against larger ones. No protective mechanisms were created for this.

As much as Brazilian law has evolved, big capital continued to win the dispute, and even having its power made positive in each new legal system that emerged. Whether choosing the administrator based on who had the most credits, or giving them greater voting weight, the mechanism has changed little and the problem has been tangential throughout history.

Law No. 14,112, of December 24, 2020, did not bring major changes that would change the scenario either.

Therefore, it is essential for Brazilian business activity that this problem be resolved as soon as possible. The current scenario needs to be modified through legislative changes.

It is necessary for the Brazilian congress to deal more seriously with the protection of holders of smaller credits and create specific mechanisms that reduce the power of large creditors in judicial reorganizations and bankruptcies so that, finally, Brazilian bankruptcy law finds its balance.

REFERENCES

BRASIL. Decreto-Lei nº 7.661, de 21 de junho de 1945. Lei de Falências. Diário Oficial da União, Brasília, DF, 31 jul. 1945. Disponível em: http://www.planalto.gov.br/ccivil_03/decreto-lei/del7661.htm. Acesso em 26/03/2022.

BRASIL. Lei nº 11.101, de 9 de fevereiro de 2005. Regula a recuperação judicial, a extrajudicial e a falência do empresário e da sociedade empresária. Diário Oficial da União, Brasília, DF, 9 fev. 2005. Disponível em: http://www.planalto.gov.br/ccivil_03/_ato2004-2006/2005/lei/l11101.htm. Acesso em 26/03/2022.

BRASIL. Lei nº 14.112, de 24 de dezembro de 2020. Altera as Leis nº 11.101, de 9 de fevereiro de 2005, 10.522, de 19 de julho de 2002, e 8.929, de 22 de agosto de 1994, para atualizar a legislação referente à recuperação judicial, à recuperação extrajudicial e à falência do empresário e da sociedade empresária. Diário Oficial da União, Brasília, DF, 26 de março de 2021. Disponível em: http://www.planalto.gov.br/ccivil_03/_ato2019-2022/2020/lei/L14112.htm. Acesso em 26/03/2022.

COELHO, Fábio Ulhoa. Manual de Direito Comercial: direito de empresa. 23ª edição. São Paulo: Saraiva, 2011.

FAUSTO, Bóris. História do Brasil. 12ª edição. São Paulo: Edusp, 2006.

TEIXEIRA, Tarcisio. Direito Empresarial Sistematizado: doutrina, jurisprudência e prática. 5ª edição. São Paulo: Saraiva, 2016.

[1] Postgraduate in Business Law at the Pontifícia Universidade Católica do Rio de Janeiro (Puc-Rio), Bachelor of Law from the Universidade Federal Fluminense. ORCID: 0000-0001-6700-3204.

Submitted: February, 2022.

Approved: April, 2022.

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