Can any company request judicial recovery?

After the crisis case at Lojas Americanas, where judicial recovery was requested, this week a company from Espírito Santo is also in judicial recovery, Viação Grande Vitória. But after all, what is judicial recovery? Can any company make this negotiation?

According to lawyer Josmar de Souza Pagotto - a specialist in Real Estate and Corporate Law, Judicial Recovery and Bankruptcy, Contractual, Civil Liability, Tax and Financial Criminal Law, and consulting for large businesses - judicial recovery is nothing more than preventing a company from going bankrupt. "The objective of judicial recovery is to preserve jobs, the suppliers of that company, so a request is made to the court, which will be analyzed, and the company will have a period to settle and renegotiate its debts, and also, collections are suspended for a period of 60 days," explains the lawyer.

"In general, any company that is in financial difficulty could request judicial recovery, but there are exceptions precisely because those companies that are under the control of the Central Bank - regulated by laws 6024/75 (financial institutions, health plans, consortia that deal with popular economy) cannot file for judicial recovery," says Pagotto. They will undergo extrajudicial liquidation, which is a normal procedure, and if the liquidator identifies that this institution cannot honor at least half of its debt, its bankruptcy is declared," he points out.

To request judicial recovery, legal requirements must be met to request bankruptcy, one of which is the approval of the majority of partners. "In addition to the Civil Code, Article 48 and Article 51 of Law 11.101/05 will establish the other legal requirements for requesting judicial recovery. Only those who have been active for more than two years can request it, for example," notes Pagotto.

"Lojas Americanas has R$ 800 million in cash and a debt of R$ 43 billion, being the fourth largest judicial recovery in the history of the country, according to the Infomoney website.

According to Pagotto, there is indeed a great dilemma for entrepreneurs since judicial recovery generates a situation of loss of credit, market credibility, and loss of business. "No company likes to go through a situation of economic and financial instability," he says. "When things are already at rock bottom, there is no way to postpone it any longer, and that is what happened with Lojas Americanas," he highlights.