About Falência Law
Falência law in Brazil, known as the Lei de Falência e Recuperação de Empresas, governs insolvency procedures for companies and, in some cases, individuals. It provides a framework to wind down a business while balancing creditors' rights and the debtor's economic viability. The law outlines processes for judicial recovery, extrajudicial recovery, and liquidation, along with the roles of creditors, judges, and a court appointed administrator.
Key concepts include recuperação judicial (a plan to restructure debts and continue operations), recuperação extrajudicial (an agreement with creditors outside court), and falência (extinction of the company through liquidation when recovery is not feasible). Understanding these terms helps you determine the right path and expected outcomes for your case.
Why You May Need a Lawyer
Dealing with falência or recovery procedures is complex and time sensitive. A lawyer can translate technical rules into practical steps and protect your legal and financial interests.
- Debt restructuring for a stressed business: A company with cash flow problems seeks a judicial recovery to renegotiate debts with creditors while continuing operations, requiring a detailed plan and creditor negotiations.
- Creditor action after a debtor files for recovery: A supplier or bank needs to file timely claims, contest priority classifications, and monitor the debtor’s plan to maximize recoveries.
- Worker wage claims during a bankruptcy: Employees seek priority payments for wages, vacation, and severance, which must be properly filed and protected in the recovery or liquidation process.
- Contesting a debtor’s plan or asset valuation: A creditor disputes asset appraisals or the viability of the proposed plan, requiring expert testimony and careful procedural handling.
- Formation of a robust recovery plan: A business owner or advisor wants a viable plan that preserves employment and asset value, while meeting legal requirements for creditor consent.
- Navigating extrajudicial recovery options: A debtor explores out-of-court settlements with creditors under court oversight, needing precise documentation and compliance steps.
Local Laws Overview
Brazil's falência framework is defined by specific statutes and regulatory guidance. The core rules are set out in the federal statutes, with refinements to procedures and creditor protections implemented over time.
- Lei n° 11.101/2005 - Lei de Falência e Recuperação de Empresas. Esta lei estabelece os procedimentos de falência, recuperação judicial e recuperação extrajudicial, bem como a organização do processo e o papel do administrador judicial.
Resumo oficial: o objetivo da recuperação judicial é preservar a empresa, sua função social e os empregos.
Planalto - Lei 11.101/2005
- Lei n° 14.112/2020 - Altera a Lei 11.101/2005 para ampliar mecanismos de recuperação, flexibilizar aspectos de negociação com credores e ajustar regras de supervisão. O conjunto de mudanças entrou em vigor nos anos recentes e continua a impactar procedimentos em curso. Planato - Lei 14.112/2020
- Consolidação das Leis do Trabalho (CLT) - Lei no 5.452/1943, que regula créditos trabalhistas e prioridade de pagamento em processos de falência. Em falências, créditos salariais e outros direitos dos trabalhadores recebem tratamento específico conforme a legislação trabalhista.
Frequently Asked Questions
What is Falência and how does the process start in Brazil?
Falência is the formal insolvency declaration for a company. It starts with a petition to the court, usually by creditors or the debtor, followed by court assessment and appointment of an administrator.
What is recuperação judicial and when should a company seek it?
Recuperação judicial is a plan to restructure debts while continuing operations. It is typically pursued when there is a viable business but cash flow problems threaten solvency.
How long does a typical recuperação judicial take from filing to decision?
Procedures vary widely, but typical timelines extend over several months to years, depending on plan approval, creditor negotiations, and court workload.
Do I need a lawyer to file for falência or recuperação?
Yes. A lawyer ensures correct jurisdiction, filing requirements, creditor notices, and a sound recovery plan, reducing the risk of dismissal or delays.
What is the difference between falência and recuperação judicial?
Falência ends the business with liquidation of assets, while recuperação judicial aims to restore operations and restructure debts through a formal plan.
How much does hiring a falência lawyer cost on average?
Costs vary by complexity, but expect fees for initial consultation, document preparation, court filings, and potential success fees after plan approval.
What steps should I take to prepare a recovery plan?
Gather financial statements, asset valuations, creditor lists, and employee data. A lawyer will help draft a plan with realistic payment proposals and timelines.
Is it possible to negotiate a recovery outside court, or extrajudicially?
Yes, extrajudicial recovery can occur with court oversight, but requires formal documentation and creditor consent to be binding.
How long can a falência process take to close after liquidation starts?
Liquidation can take months to years depending on asset complexity, creditor claims, and disputes over asset valuations and distributions.
Do I need to hire a local lawyer in my state for falência matters?
Local practice varies, but having a lawyer licensed to practice in the relevant state courts helps with procedural norms and local judges.
What is the difference between a creditor and a class of credits in falência?
Creditors are grouped by class, such as workers, tax authorities, and ordinary creditors. Each class has different priority and treatment in a plan.
Can foreign creditors participate in falência proceedings in Brazil?
Foreign creditors may participate, but they must follow local procedures, file through Brazilian counsel, and comply with Brazilian rules on notices and distributions.
Additional Resources
- Planalto - Lei n° 11.101/2005 - Texto oficial da Lei de Falência e Recuperação de Empresas. https://www.planalto.gov.br/ccivil_03/leis/l11101.htm
- Planato - Lei n° 14.112/2020 - Alterações à Lei de Falência e Recuperação de Empresas. https://www.planalto.gov.br/ccivil_03/leis/L14112.htm
- CNJ - Conselho Nacional de Justiça - Informações gerais sobre falência, recuperação judicial e procedimentos judiciais. https://www.cnj.jus.br
Next Steps
- Identify your needs: determine if you require recuperação judicial, recuperação extrajudicial, or falência administrativa com liquidação.
- Compile documents: gather financial statements, tax records, payroll data, and creditor lists to share with a lawyer.
- Consult multiple lawyers: schedule at least 2-3 consultations with falência specialists to compare approaches and fees.
- Check credentials and state licensing: confirm the attorney practices in your jurisdiction and has relevant experience.
- Ask about strategy and timelines: request a detailed plan with milestones, filing timelines, and potential outcomes.
- Review engagement terms: understand fees, reimbursement for expenses, and their scope of work.
- Proceed with representation: once you select a lawyer, sign an engagement letter and start the case filing process.
Important notice: This guide is informational and does not substitute for legal advice. Laws and procedures vary by jurisdiction and can change over time. Always consult a qualified falência attorney for your situation.
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Aviso Legal:
As informações fornecidas nesta página são apenas para fins informativos gerais e não constituem aconselhamento jurídico. Embora nos esforcemos para garantir a precisão e relevância do conteúdo, as informações jurídicas podem mudar ao longo do tempo, e as interpretações da lei podem variar. Deve sempre consultar um profissional jurídico qualificado para aconselhamento específico à sua situação.
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