Judicial reorganization requests continue to grow

Judicial reorganization requests continue to grow
Judicial reorganization requests continue to grow
The country’s judicial recoveries have increased considerably in recent months. From January to February, there was an increase of 83.7% in recovery requests, according to data released by Serasa Experian. The number of applications for February is also 11% higher compared to the same month last year.
Disclosure

Of the 90 orders in the last month, 71 were from micro and small companies. There are already 139 orders in 2021. With the acceleration, it is expected to reach the same level as in 2016, when 1,865 companies requested recovery in the midst of the recession caused by the political and economic crisis.

Until the end of the last year, the order numbers were low. Judicial recoveries fell by 15% in 2020. In the last month of November, orders reached the lowest number since 2013 – only 52.

Thus, the sudden growth signals a pent-up demand. In 2020, with the Covid-19 crisis, companies were able to count on a greater market disposition for debt renegotiations and term extensions. In addition, there was government interference, with loosening of labor rules, interest control and payment of emergency aid, which maintained consumption. But the prolonged duration of the health crisis caused these incentives to run out.

“All of this led to the expectation that 2021 would be a better year and that it might not be necessary to file for judicial reorganization”, he points out Ulisses Simões da Silva, lawyer at LO Baptista Advogados. “It turns out that in 2021, in fact, things got worse. We have a pandemic with larger numbers, the economy did not react, the government greatly reduced the incentives and injections of money it had made into the economy. All of this meant that companies did not have more breath. ”

Ulisses also highlights the recent Bankruptcy and Judicial Reorganization Law as a reason for this growth. The new provisions would have made the procedure a little more “attractive” for companies in need, which gain more legal certainty. “Companies have looked more at this possibility, because the new law brings mechanisms that facilitate the possibility of renegotiating debts, among other things”, he explains.

Sanctioned in December, the rule provides, for example, the possibility of accessing new credits – a major difficulty for companies undergoing judicial reorganization. “It is often the only chance for an indebted company to obtain new capital to inject in its restructuring”, explains the lawyer.

Alternatives
Despite the acceleration of recovery requests, there is little expectation of renewal of government incentives, due precisely to the prolongation of the Covid-19 crisis. “The emergency aid itself has already been offered for a much smaller amount, and this will certainly have an impact. Even if the incentives for companies are maintained, capital is withdrawn from the consumer market”, emphasizes Ulisses.

Something that can prevent this increase is the extrajudicial recovery, which has also gained new regulation. The lawyer considers that this instrument should reduce the number of judicial recoveries, since the new law, for example, made it possible to include labor claims and reduced the quorum for approval.

In addition, the mechanism is advantageous because of the reduction in expenses: “It is something that the company conducts directly with creditors, it does not need an office, it does not need a judicial administrator”, remembers Ulisses.

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