PL 3/2024 | New Bankruptcy Law | House of Representatives

The purpose of bankruptcy proceedings is to organize the liquidation process of unviable companies, recovering debts and mitigating damages to those involved. In this way, productive assets can be reallocated to their best use. In Brazil, however, the bankruptcy process is slow and ineffective. Creditors have little influence over the fate of the bankrupt estate, and there is little transparency regarding information about the bankruptcy process. These factors harm creditors and entrepreneurs and, more broadly, the efficiency and productivity of the Brazilian economy.

One of the main purposes of the project is to improve the governance of the bankruptcy process, expanding the participation of creditors and making them protagonists in the process, as they are the most interested parties in the efficient liquidation of assets. It is proposed that the general meeting of creditors be given new powers, including the approval of the bankruptcy plan – a document introduced by this proposal – and the power to appoint a fiduciary manager to conduct the asset liquidation and creditor payment process. The bankruptcy plan should regulate the main stages of bankruptcy, namely: (i) management of the bankrupt estate's financial resources; (ii) sale of assets; (iii) measures to be taken in relation to ongoing judicial or administrative proceedings; (iv) payment of liabilities; and (v) possible hiring of professionals, specialized companies, or appraisers.

To expedite the bankruptcy process, the proposal waives the need for judicial approval for actions related to the asset sale plan and the payment of liabilities after the bankruptcy plan has been approved by the general meeting of creditors and ratified by the judge. Furthermore, the proposed text seeks to discourage frivolous disputes among creditors and encourage the debtor and creditor classes to cooperate in finding swift solutions in the bankruptcy process.