The São Paulo Court of Justice waives the requirement for a creditors' meeting to approve the transfer of company shares.

The 1st Reserved Chamber of Business Law of the TJ/SP (Court of Justice of São Paulo) waived the requirement to convene a creditors' meeting to authorize the transfer of shares of the debtor company to an investment fund, since the transaction between private parties is not subject to creditor control and there is no proposal to alter the payment terms of the approved judicial reorganization plan.

According to the court records, the judicial reorganization plan for the food company was approved at a creditors' meeting and ratified by the court. Through a specific clause, the creditors authorized "any corporate reorganization operations," with specific mention of the possibility of an "onerous transfer, partial or total, of corporate control."

The company's partners then reached an agreement with an investment fund whereby the former granted the latter the right to acquire 80% of the company's shares in the form of investments. The first instance decision highlighted the need for prior approval from the judicial administrator, and also ordered measures to convene a creditors' meeting to consider the matter.

According to the rapporteur of the interlocutory appeal, Judge Fortes Barbosa, the economic content of the transaction is not subject to the control of creditors or the Judiciary.

"The valuation of the company shares is solely the responsibility of the assignors and assignees of said shares, especially since the market valuation, in the case of a company undergoing judicial reorganization, does not, in this scenario, correspond to the value equivalent to the paid-in share capital, contrary to what was suggested by the Judicial Administrator, even more so considering the current economic crisis, generated by the adoption of social distancing measures linked to the Covid-19 pandemic, whose consequences are very uncertain."

The rapporteur noted:

"It should be noted that, in this case, no alteration to the approved recovery plan is being proposed. What matters to the creditors is the fulfillment of the obligations assumed by the company undergoing recovery, regardless of who manages it, and if these obligations are not observed, the judicial recovery will be converted into bankruptcy. Their primary interest is to be paid, regardless of who controls the debtor company."

The judgment, which resulted in a unanimous vote, included the participation of judges Pereira Calças and Cesar Ciampolini.

The Papaterra Limongi Risson Jacette law firm sponsored the case.

Case No. 2160442-08.2020.8.26.0000

Source: Migalhas