Contemporary business activities cross borders. Considering the internationalization and interdependence of global relations, complex corporate structures located in different jurisdictions economically and politically influence commercial relations and the countries in which they operate.
The entrepreneur who carries out an economic activity under these conditions faces difficulties. The main one occurs when the transnational company becomes unable to ensure the fulfillment of its obligations, giving rise to insolvency. In the event of a collapse, in the absence of a strong legal structure to regulate these relationships, any effort to recover the assets of these companies may become impossible.
The progressive increase in the number of transnational insolvency situations, represented in bankruptcy and judicial recovery proceedings, is a portrait of the expansion of investments and international trade.
Recently, on December 24, 2020, the President of Brazil sanctioned Law No. 14,112/2020, which amended the Brazilian Bankruptcy Law (Law No. 11,101/2005) and incorporated the UNCITRAL (United Nations Commission on International Trade Law) Model Law on Cross-Border Insolvency. The main purpose is to establish efficiency in countries for the resolution of insolvency cases of transnational companies.
The provisions presented in the new legislation aim to implement international cooperation mechanisms between the courts and other judicial authorities of the States, in order to ensure greater legal security between global business relations. In addition, the Law addresses resources to introduce a more equitable and efficient administration of transnational insolvencies and to facilitate the reorganization of companies in financial difficulties.
The new Law guarantees agents of a foreign insolvency proceeding and creditors the right to access the Brazilian courts and request assistance, avoiding time-consuming means such as letter rogatory. The principle of the reasonable length of the proceedings and the principle of efficient administration of the assets are achieved with the improvement of these mechanisms.
Our office assists creditors in court-supervised reorganization and bankruptcy proceedings in cases where the company has branches and connections in other countries, in order to obtain recognition of the Brazilian proceeding by foreign courts. In particular, in the case of the United States, we request the recognition based on Chapter 15 of the U.S. Bankruptcy Code, and the opening of discovery proceedings to obtain information. Subsequently, the information is processed in an audit of accounts, within established practices for identifying fraud.
In cases where the hidden/diverted assets are legally owned by creditors, the recovery is carried out under judicial supervision and authorization, with the full support of our team of lawyers and specialists.