Best Restructuring & Insolvency Lawyers in São Paulo

About Restructuring & Insolvency Law in São Paulo, Brazil

Restructuring and insolvency law deals with helping businesses and individuals facing financial distress to reorganize their debts or manage the process of closing a business due to inability to pay creditors. São Paulo, as the largest financial and commercial hub in Brazil, sees a significant share of insolvency cases and restructurings. The process is governed by a specific set of legal rules that aim to protect the interests of both debtors and creditors, ensure fair solutions, and preserve economic activity whenever possible. Restructuring focuses on enabling a company to overcome its difficulties and continue operating, while insolvency usually leads to the liquidation of assets to pay off debts.

Why You May Need a Lawyer

Restructuring and insolvency matters are complex and can have significant financial, legal, and reputational impacts. You may need a lawyer in São Paulo if you find yourself in any of the following situations:

• Your business is unable to meet its financial obligations and is at risk of bankruptcy.
• You are a creditor whose customer or partner is undergoing restructuring or insolvency proceedings, and you want to protect your rights and recover what you are owed.
• You need guidance on out-of-court restructuring agreements or judicial recovery processes.
• You are an investor interested in acquiring assets from insolvent or bankrupt companies.
• You need to understand your risks and duties as an executive or manager in a company facing financial distress.
• You require representation in negotiations with creditors or in court proceedings.
• You face cross-border insolvency issues involving foreign entities or assets.

A lawyer can help you navigate the intricate legal requirements, analyze the best strategy, and protect your interests throughout the process.

Local Laws Overview

Restructuring and insolvency in Brazil are mainly governed by Federal Law 11.101/2005, known as the "Bankruptcy and Judicial Reorganization Law." São Paulo adheres to these national laws, but the local court system and experienced professionals play a significant role in shaping how cases are managed.

Key aspects of local restructuring and insolvency law include:

• Judicial Recovery (Recuperação Judicial): A legal process by which companies in distress can reorganize their debts while continuing operations, subject to court oversight.
• Extrajudicial Recovery (Recuperação Extrajudicial): An out-of-court agreement between a debtor and its creditors, approved by the court and involving less court intervention.
• Bankruptcy (Falência): The formal liquidation of a company’s assets to pay creditors, resulting in the closure of the business.
• Stay Period (Período de Suspensão): A period during which lawsuits and collection efforts against the company are temporarily suspended after the commencement of judicial recovery.
• Classification of Creditors: Creditors are classified into different groups, each with varying priorities in repayment.
• Special Rules for SMEs: Small and micro-enterprises benefit from simplified processes in insolvency and restructuring matters.
• Court Jurisdiction: The São Paulo courts have specialized divisions for bankruptcy and business law, reflecting the city’s importance in these matters.

It is important to rely on experienced local legal counsel due to frequent changes in jurisprudence and the highly technical nature of proceedings in São Paulo.

Frequently Asked Questions

What is judicial recovery and who can use it?

Judicial recovery is a court-supervised process that allows companies facing financial difficulty to reorganize their debts and attempt to continue business operations. It is available to most legal entities engaged in commercial activity, except for certain financial institutions and public entities.

How does bankruptcy differ from judicial recovery?

Bankruptcy involves the judicial liquidation and closure of a business, whereas judicial recovery aims to restore a company to financial health by restructuring debts under court supervision.

Can individuals declare bankruptcy in São Paulo?

Yes, individual entrepreneurs can file for bankruptcy. However, personal bankruptcy for consumers is not managed under the business bankruptcy law but under separate civil procedures.

What happens to employees during judicial recovery or bankruptcy?

Employees’ labor rights are generally protected by law. Wage claims have priority in the payment order during both recovery and bankruptcy proceedings.

Will all my debts be forgiven if I file for bankruptcy?

No, bankruptcy usually involves the liquidation of assets to pay as much debt as possible. Some debts, especially tax and labor claims, may not be fully discharged.

How long does a judicial recovery process last?

The duration varies depending on the complexity of the case, the number of creditors, and the terms of the restructuring plan. Most processes last several months to a few years.

Can creditors participate in the restructuring process?

Yes, creditors are actively involved, especially in approving or rejecting the restructuring plan proposed by the debtor in judicial recovery.

Is out-of-court restructuring possible in São Paulo?

Yes, extrajudicial recovery allows debtors and creditors to negotiate restructuring agreements outside of court, which can be ratified by a judge to gain legal effect.

Are foreign creditors protected in Brazilian insolvency proceedings?

Foreign creditors have similar rights as local creditors, and Brazilian law provides for the recognition of certain foreign court decisions, subject to local procedures.

What are the risks of improperly handling insolvency or restructuring?

Mismanagement can lead to loss of legal protections, personal liability for managers, criminal penalties for fraud, and reduced chances of financial recovery.

Additional Resources

• São Paulo State Court of Justice (Tribunal de Justiça do Estado de São Paulo): The court has specialized bankruptcy and business law divisions handling local cases.
• Receita Federal (Federal Revenue Service): For information on tax obligations and insolvency-related tax matters.
• SEBRAE-SP: The Brazilian Micro and Small Business Support Service provides advice and resources for small businesses facing distress.
• Instituto Brasileiro de Estudos de Recuperação de Empresas (IBR): Offers research, events, and educational materials on restructuring and insolvency.
• Ordem dos Advogados do Brasil - Seção São Paulo (OAB-SP): The local bar association can help you find qualified attorneys experienced in insolvency and restructuring.

Next Steps

If you believe you may need legal assistance with restructuring or insolvency in São Paulo, consider the following steps:

• Assess your financial situation or your company’s financial health and gather relevant documents.
• List your key concerns and objectives before meeting with a lawyer.
• Contact an attorney or law firm specializing in restructuring and insolvency. It is important to choose someone familiar with São Paulo’s courts and local practices.
• Be prepared to discuss your financial information openly and honestly to receive accurate advice.
• If you are a creditor, collect the contracts and evidence supporting your claims.
• Monitor all legal deadlines to avoid losing your rights or missing opportunities during proceedings.
• Stay informed throughout the process and do not hesitate to ask your legal counsel about any doubts or procedures.

Taking prompt legal action can improve your chances of a positive outcome, whether your goal is to restructure debts, protect your assets, or recover what you are owed.