President Jair Bolsonaro sanctions new Brazilian law for judicial recovery.
The law has been in effect since its publication. The excerpts that were vetoed by President Jair Bolsonaro, will be analyzed again by the National Congress.
At the end of this week, President Jair Bolsonaro sanctioned the bill that reformed the Bankruptcy and Judicial Recovery Law. But the president signed the text with vetoes. The text is the update of the 2005 legislation and aims to give breath to companies with financial difficulties.
The text was approved by the Federal Senate at the end of November this year. President Jair Bolsonaro vetoed six excerpts from the text. Among the vetoed stretches is that which allowed the execution of labor debts to be suspended.
The government claims that this stretch could harm workers’ interests and cause legal uncertainty, as there is a “mismatch” with the legislation. The government explained that this section was not in accordance with the legislation that gives priority to labor claims and related to work accidents.
In this way, a recovery can be made by companies that are unable to honor payments. In this case, the company can go to court with a recovery request. If the request is accepted, the company is protected for a period against the execution of its debts. With that time, the company has more time to show a restructuring plan and negotiate its debts with those who they owe.
There were also vetoes on articles that gave tax benefits without a planned cancellation by another company.
Will the new Brazilian law for judicial recovery, sanctioned by President Jair Bolsonaro, prove to be effective?