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- Judicial reorganization is the court measure that seeks to provide the debtor a means for overcoming its financial and economic reverses, which is through a judicial reorganization plan that is negotiated and approved by its creditors. The main objective of the measure is to protect the debtor’s assets during the course of negotiation with its creditors, which shall permit reorganization of the debtors’ activities and conformity of its capital structure to its payment capacity.
- After the process of judicial reorganization has been granted, all actions and excecutions against the debtor are stayed for 180 days (“Stay period”). The judge should also appoint a trustee, who shall be in charge of monitoring and inspecting the judicial reorganization process.
- The debtor shall submit a judicial reorganization plan (“Plan”). The Plan should state, among other information, the creditors subject to the Plan and the terms and conditions for their respective payment.
- The creditors may submit their objections to the Plan. If any objection is untimely submitted to the judicial reorganization court, the Plan shall be resolved and approved at a General Meeting of Creditors (“AGC”).
- If the Plan is approved by the creditors in the AGC, according to the criteria and formalities defined in Law 11101/2005, judicial reorganization will be granted. The debts of the debtor subject to the Plan will be renewed, and the payment conditions set out in the Plan shall prevail.
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Last Update on May 26, 2009 |
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