CNJ approves recommendation for courts regarding judicial reorganization.

The National Council of Justice approved, in a virtual session this Tuesday (March 31), a recommendation to guide judges and standardize the treatment of judicial recovery processes during the coronavirus (Covid-19) pandemic.

Upon reading the proposal , Councilor Henrique Ávila stated that the measure aims to help judges who are not specialized in the matter and "mitigate the economic effects resulting from the measures recommended by health authorities to control the pandemic."

The proposal originated from the working group created by the CNJ (National Council of Justice) to contribute to improving the Judiciary's performance in judicial reorganization and bankruptcy proceedings. The group is coordinated by the Minister of the Superior Court of Justice, Luís Felipe Salomão, an expert on the subject.

According to lawyer Samantha Mendes Longo, partner at Wald, Antunes, Vita, Longo e Blattner Advogados, the new recommendation "is of crucial importance at this delicate moment for companies in recovery."

"The general guidance to judges, especially those who judge corporate reorganization cases but are not from specialized courts, contributes to providing legal certainty. The central idea is to allow companies undergoing reorganization to continue their activities, fulfilling their social function, protecting jobs and the economy itself," said the lawyer, who also participates in the working group.

Read below all the recommendations approved for all courts with jurisdiction to judge corporate reorganization and bankruptcy cases:

a) prioritize the analysis and decision regarding the release of funds in favor of creditors or companies undergoing restructuring;

b) suspend in-person General Creditors' Meetings, authorizing virtual meetings when necessary to maintain the debtor's business activities and to begin payments to creditors;

c) to extend the suspension period provided for in Article 6 of the Bankruptcy Law when there is a need to postpone the General Meeting of Creditors;

d) to authorize the presentation of a modified recovery plan when a decrease in the capacity to fulfill obligations due to the Covid-19 pandemic is proven, including the consideration, in specific cases, of the occurrence of force majeure or fortuitous event before any declaration of bankruptcy (Bankruptcy Law, art. 73, IV);

(e) to instruct the judicial administrators to continue monitoring the activities of the four companies undergoing reorganization virtually or remotely, and to publish the Monthly Activity Reports on the Internet; and

f) to carefully assess the granting of urgent measures, evictions for non-payment, and enforcement actions of a patrimonial nature in legal proceedings that demand obligations that were not fulfilled during the state of public calamity recognized by Legislative Decree No. 6 of March 20, 2020.

Source: Conjur