Restructuring and Insolvency Newsletter: June and July 2025 updates

According to the Superior Court of Justice (STJ), arbitration prevails as the dispute resolution mechanism in a contract entered by the debtor under judicial reorganization

The 2^nd Panel of the Superior Court of Justice (STJ) reversed the decision of the Court of the State of Pernambuco that had terminated a contract without considering the existence of an arbitration clause. Reporting Justice Raul Araújo pointed out that, even in cases of contracts entered by companies under judicial reorganization, arbitration prevails over the reorganization court in contractual disputes, according to the STJ’s position and as provided for in the Brazilian Bankruptcy Law (Law 11.101/2005). Therefore, STJ declared the jurisdiction of the Business Mediation and Arbitration Chamber (CAMARB/SP) to resolve the dispute.

Judicial deposit may avoid liquidation due to non-compliance with the judicial reorganization plan

The 3^rd Panel of the STJ has ruled that a judicial deposit of the disputed amount can be used to prevent a company’s liquidation in the event of non-compliance with financial obligations provided in a judicial reorganization plan. In liquidation proceedings, the debtor may post a bond within the defense period, covering the full amount of the disputed claim, thereby enabling the debtor to have the liquidation order lifted. According to Rapporteur Nancy Andrighi, judicial deposits are compatible with liquidation requests based on default of judicial reorganization plan, allowing the debtor to make a judicial deposit equivalent to the total amount of the claim and thereby avoid liquidation. The liquidation request was made by a creditor due to the debtor’s failure to make payments under the judicial reorganization plan.

Medical cooperatives can file for judicial reorganization

Following the decision of the Supreme Federal Court (STF) of October 2024 in the Direct Action of Unconstitutionality – ADI 7.442, the 4^th Panel of the STJ, unanimously, recognized two special appeals that aimed to authorize the request for judicial reorganization of medical cooperatives. The São Paulo State Court of Appeals (TJSP) initially rejected the request, holding that only business entities were eligible for the reorganization process. Rapporteur Marco Buzzi pointed out that the amendment to the Brazilian Bankruptcy Law enables medical cooperatives to file for judicial reorganization.

STJ denies request to change the remuneration index approved in judicial reorganization plan

The 3^rd Panel of the STJ denied the special appeal filed by companies undergoing judicial reorganization, which sought to modify the remuneration index for unsecured claims stipulated in an approved judicial reorganization plan. The debtors had requested the change of the Interbank Deposit Certificate (CDI) interest rate to the National Consumer Price Index (INPC), alleging excessive burden, but the request was rejected. According to the Reporting Justice Moura Ribeiro, the interest rate or inflation index should be fixed by the creditors’ meeting, and the Court’s role is limited to ensuring compliance with the law, intervening only in cases of illegality or abuse, which were not found in this case.

The Court of Appeals of the State of Goiás (TJGO) annuls corn seizure by recognizing that a CPR Financeira is subject to judicial reorganization

The 4^th Civil Chamber of the Court of Appeals of the State of Goiás (TJGO) deemed null and void the seizure of corn ordered in the judicial reorganization proceeding of rural producers after recognizing the credit was subject to the proceeding. The decision recognized that the Rural Product Note (CPR) had a financial nature, constituting a credit instrument with a pecuniary obligation rather than the physical delivery of products. Thus, the TJGO view was that the CPR would be subject to the effects of judicial reorganization and would be equivalent to an unsecured credit. Consequently, it was concluded that the continuation of the seizure measure would violate the stay period provided for in the Brazilian Bankruptcy Law.

The Court of Appeals of the State of São Paulo (TJSP) admits Centralized Enforcement Regime for football club that is not a Football Corporation

The 1^st Reserved Chamber of Corporate Law of the Court of Appeals of the State of São Paulo has ruled that the Centralized Enforcement Regime (RCE) – an alternative mechanism to judicial or extrajudicial reorganization established by the Football Corporation Law (Law 14.193/2021), which centralizes in a single court the enforcement proceedings and revenues for the payment of football team creditors – can be used by football clubs even without the constitution of a Football Corporation (SAF). Furthermore, the court decided that the enforcement proceedings against the football club can be stayed until the presentation and approval of the payment plan provided for in the RCE.

Request for judicial reorganization is extinguished due to evidence of fraud

The 2^nd Regional Court of Conflicts Related to Arbitration of the State of São Paulo dismissed a judicial reorganization request filed by retail companies after evidence emerged of asset stripping and fraudulent management. A preliminary expert analysis revealed a lack of business activity, omission of essential documents, and asset commingling between companies within the group, to the personal benefit of an individual shareholder. Upon presentation of the expert report, the debtors withdrew from the judicial reorganization proceedings. The Court concluded that the judicial reorganization had been improperly used as a means of assets shielding from the companies’ insolvency resulted from asset misappropriation and corporate and asset commingling. In addition, the Court ruled that the debtors had acted in bad faith, in accordance with the Code of Civil Procedure (Law 13.105/2015).

Increase in requests for judicial reorganization in agribusiness in the 1^st quarter

According to Serasa Experian, in the first quarter of 2025, almost 389 requests for judicial reorganization were filed, an increase of 21.5% compared to the same period in 2024 and almost 45% in the annual comparison. Most cases involve rural producers who act as individuals, and the main causes pointed out are high costs, long payment schedules, excess of collateral, and difficulties in refinancing.

For more information on this topic, please contact Mattos Filho´s Restructuring and Insolvency practice area.