For those who are immersed in the insolvency area, or for those who are only interested in the matter, Article 49, of Law 11101/2005, establishes the claims and obligations that may be renegotiated by Debtors in a Court-Supervised Reorganization Plan .
Thus, the aforementioned article sets forth: all claims existing on the date of the petition, even if not overdue, are subject to court-supervised reorganization.
Nevertheless, for legislative reasons and diffuse interests, some claims and creditors, even if “existing on the date of the petition for Court-Supervised Reorganization,” by normative force, will not be subject to the effects of the Court-Supervised Reorganization, as is the case of a creditor holding a fiduciary position in movable or immovable property (Paragraph 3, Article 49).
It is worth bearing in mind that fiduciary sale security is the legal transaction whereby the secured thing is a terminable property of the Debtor, until full compliance with the obligation to the Creditor, however, the holder of the right to the secured asset will always be the Creditor, which will prevail with its rights of consolidation of property, in the event of noncompliance with the obligation originally agreed.
The features and provisions about fiduciary sale are available online in an article published by the Pontifical Catholic University of São Paulo (PUC-SP) (https://enciclopediajuridica.pucsp.br/verbete/471/edicao-1/alienacao-fiduciaria-em-garantia, accessed on 06/26/2024, at 10 am).
Interestingly enough, although the legal universe tends to answer any question with the phrase “it depends…”, there is no doubt in the legal domain, opinion of jurists, and caselaw, about this statement: claims secured by fiduciary sale are not subject to renegotiation by Court-Supervised Reorganization.
After the brief digression to address fiduciary sale and the non-subjection of legal transactions to the effects of Court-Supervised Reorganization, the “in case it works” theory, adopted by those who do not give precedence to good procedural technique, but typically try to play it down and advances the thesis of: “the claim secured by fiduciary sale should be subject to Court-Supervised Reorganization when the asset fiduciarily secured is considered essential to the recovery of the relevant activity.”
Although the Fiduciary Creditor is not subject to the effects of the Court-Supervised Reorganization, in view of the provision of Article 6, Paragraph 6 and Paragraph 7 of Law 11101/2005, if the secured asset is deemed a capital good essential for the maintenance of the business activity, the Fiduciary Creditor is prevented for a certain time from EXPROPRIATING the property, even if the Debtor is in default. Such impediment is known as a stay period, which is defined as 180 days counted from granting the processing of the Court-Supervised Reorganization, extendable only once, for an equal period, and on an exceptional basis, the interval within which Fiduciary Creditors cannot adopt – NOTA BENE – measures of expropriation of property object of the fiduciary sale security.
Changing the analytical discourse in question to an understanding accessible through a hypothetical case study, this is (or should be) the scenario involving the treatment of Fiduciary Creditors in Court-Supervised Reorganizations:
1. Certain Debtor (X) files for its Court-Supervised Reorganization and, after fulfilling the legal requirements, obtains the decision granting the processing of Court-Supervised Reorganizations by the Court of Competent Jurisdiction.
2. The Debtor (X) has, among its countless obligations, legal transactions entered into with a fiduciary sale security.
3. If the Debtor (X) is in default with the Fiduciary Creditor (Y) and the asset object of the security, after a decision by the Reorganization Court, is considered as a capital good and essential to the recovery of the business activity, although it cannot renegotiate the amount of debt and conditions of the original contract via the Court-supervised Reorganization Plan, the Debtor (X) may CONSOLIDATE THE PROPERTY, however, and at that time, the ASSET cannot be EXPROPRIATED, with Debtor remaining in “possession” of the object of the security, for a period not exceeding three hundred and sixty (360) days – stay period.
4. After the expiration of term of three hundred and sixty (360) days of the stay period, as a rule, the Fiduciary Creditor (Y) will return to the right of action, being able to adopt the appropriate measures and, from that time on, arrange expropriation outside the Reorganization Court, aiming at the fulfillment of the operations secured by fiduciary sale, if the Debtor (X), in this period, has not renegotiated its credit and fulfilled the obligations originally agreed.
A consideration is necessary about the expository reasons, in order to distinguish between legal terms and the very legal nature relative to fiduciary sale securities, namely: CONSOLIDATION OF THE SECURED THING BY FIDUCIARY SALE VS. EXPROPRIATION OF THE SECURED THING BY FIDUCIARY SALE.
Law 11101/2005, when it provided for the suspension of the forms of attachment of the assets held by the Debtor, over the course of the Court-Supervised Reorganization process, followed the logic in question and principles inherent to its restructuring, duly interpreted by the Report produced by Senator Ramez Tebet, when presenting said statute: “If the Debtor loses possession of all its secured assets or third-party properties, depending on the organizational form of the structure of the activity to be restructured, the Debtor may find itself without any assets and become unable to generate wealth and recover in the market. That being the case, the stay and temporary impediment of this sudden change in the possession of the secured asset or third-party property, should be emphasized in the rules of Law 11101/2005, without prejudice to other measures inherent to activity restructuring.”
Provided that the company’s social function, the objective good faith of the process, and the balanced division of the burden on the actors interconnected by the Court-Supervised Reorganization are observed, precedence will be given to the treatment of matters involving the possession of the asset in favor of the Debtor, over the assets considered capital goods and essential to activity restructuring.
In view of this scenario, the consolidation of the property secured by fiduciary sale is the formal act of registration in the competent registries, aiming to change the owner of the asset, in other words, the Fiduciary Creditor holding the right is registered as the holder of the PROPERTY and not of the possession, owing to the Debtor’s default (Article 26, Paragraph 7, of Law 9514/1997).
In addition, in view of this same scenario, the expropriation of the property secured by fiduciary sale is the material act carried out, after registering the consolidation of the property, in order to satisfy the obligation with the sale of the thing by means of an auction and, at that moment, POSSESSION IS CHANGED, following the legal rules to do so (see Article 27, head provision, of Law 9514/1997).
The legal differentiation of such institutes is latent, therefore, a careful reading of said articles is enough to check that they are two distinct acts and institutes, successive and capable of separation in the concrete case, to the point that it is possible to consolidate the property, without necessarily expropriating the property.
Therefore, we return to the beginning of the necessary consideration about the expository reasons, as Law 11101/2005 aims to preserve the right to possession of the assets in favor of the Debtor, but not necessarily the ownership of a certain asset, especially those arising from fiduciary sale (Article 49, Paragraph 3, of Law 11101/2005) and, with this, without impediment to carry out the formal acts of consolidation of the property.
Returning to the main issue of this article, the “in case it works” theory described above, sometimes applied in interpretations of Law 11101/2005, has brought distortions about this system of relationships governed by Law 11101/2005, thus, the Fiduciary Creditor by “minimally creative” actors, seeks mitigation of the nature of fiduciary sale, with the following discourse, devoid of any technical grounds: “when it is an asset secured by fiduciary sale and such asset is considered capital and essential to the activity to be recovered, the nature of the fiduciary security is LOST, considering it as a common unsecured credit and, owing to the recognized essentiality of the object of security, it will be subject to Court-Supervised Reorganization and subject to renegotiation of the Court-Supervised Reorganization Plan.
Yes! Outrageous! And owing to such a farfetched interpretation, with all due respect, we would like to mention a popular saying of widespread use: that’s that and this is this.
The credit secured by fiduciary sale has as its legislative and conceptual pillars the following: (i) terminable property of the object secured by the Debtor, until settlement of obligations, (ii) resumption of the object of the security by the Fiduciary Creditor in case of default of obligation, (iii) specific rules in sparse legislation, (iv) differentiations about the institutes of possession and ownership, etc.
In turn, the definition of essential capital good in Court-Supervised Reorganization refers only to the time of possession factor, that is, the period previously established in Law 11101/2005 that a Debtor may enjoy the use of the essential capital good for the activity to be restructured.
In other words, the recognition of the essentiality of the asset subject to fiduciary sale for the activity of the company to be recovered does not have the power to change the nature of the claim that falls on the assets sold on a fiduciary basis.
On the subject, the brilliant understanding of the Superior Court of Justice should be cited, as highlighted:
INTERNAL INTERLOCUTORY APPEAL ON INTERNAL INTERLOCUTORY APPEAL ON SPECIAL APPEAL. COURT-SUPERVISED REORGANIZATION. FIDUCIARY SALE. ASSET ESSENTIAL TO THE ACTIVITY OF THE COMPANY BEING REORGANIZED. CONSOLIDATION OF PROPERTY IN FAVOR OF THE CREDITOR. STAY. POSSIBILITY. CHANGE IN THE NATURE OF CLAIM. IMPOSSIBILITY. LACK OF ARGUMENTS FOR STRIKING DOWN THE APPEALED DECISION. INTERNAL INTERLOCUTORY APPEAL DENIED. 1. When the essentiality of the asset subject to fiduciary sale for the activity of a company being reorganized is recognized, the stay of the consolidation of the property in favor of the creditor is allowed, by interpretation of Article 47 of Law 11101/2005. 2. The submission to the bankruptcy court, however, does not authorize the change in the nature of the claim that falls on the assets sold on a fiduciary basis. 3. The challenged decision is maintained by its own grounds when the internal interlocutory appeal fails to bring arguments capable of altering the established position. 4. Internal interlocutory appeal denied.
(Superior Court of Justice – Internal Interlocutory Appeal on Internal Interlocutory Appeal on Special Appeal: 2049324 MG 2022/0002708-1, Reporting Justice JOÃO OTÁVIO DE NORONHA, Trial Date: 08/14/2023, T4 – FOURTH PANEL, Publication Date: DJe 08/16/2023)
Lastly, even if, owing to unreasonable and creative theses, the discussion of the subject is taken to the Reorganization Court and even if, despite the temporary impossibility of expropriating the property (and not of consolidating the property, as stated above), in case of default of the debt, owing to the enjoyment of the stay period, it should be emphasized: the recognition of the essentiality of capital good in a Court-Supervised Reorganization, arising from legal transaction executed with a fiduciary sale security, should NEVER change the nature of the obligation, much less subject such credits to the effects of Court-Supervised Reorganization, with the farfetched classification of claims in the class without privileges/unsecured, under penalty of countless risks of hindrance of the financial system, change of credit costs, privilege farfetched interpretations, and the sheer lack of respect to the principles of procedural good faith, social function of the company, and balanced division of the burden of process, thus perverting the very legal certainty sought through the procedures governed by Law 11101/2005.
BIBLIOGRAPHIC REFERENCES:
(i) Sacramone, Marcelo Barbosa, Comentários à Lei de Recuperação de Empresas e Falência, 3. Ed., São Paulo: Saraiva Jur, 2022, pág. 265;
(ii) Article: O Papel do Administrador Judicial na Recuperação Judicial do Produtor Rural, Author: Anglizey Solivan de Oliveira: Book: O Administrador judicial e a reforma da Lei 11.101/2005, coordenação João Pedro Scalzilli, Joice Ruiz Bernier, São Paulo, Almedina, 2022, Vários autores.
(iii) Article: Lei n° 14.112/2020: Legitimidade do Produtor Rural para o Pedido de Recuperação Judicial e o Tratamento dos Créditos Específicos de sua Atividade, Authors: Rosemarie Adalardo Filardi and Jhonatan Luís Marques Poiana. Book: Recuperação Judicial e Falência, atualizações da Lei n° 14.112/2020 à Lei 11.101/2005, Quartier Latin, 2021.
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1 Court-Supervised Reorganization Plan is the Debtor’s maximum proposal raised in a Court-Supervised Reorganization process, with the conditions that will be used, for the purpose of renegotiating the fulfillment of its obligations, according to the parameters and forms provided for in Article 50 and Article 53, both of Law 11101/2005.
2 In this sense: Superior Court of Justice – Special Appeal: 1938706 SP 2020/0312022-0, Reporting Justice NANCY ANDRIGHI, Trial Date: 09/14/2021, T3 – THIRD PANEL, Publication Date: DJe 09/16/2021.
3 Legal transactions without provision for specific guarantees (common).
Autor: Jhonatan Luis Marques Poiana • email: jhonatan.poiana@ernestoborges.com.br
