Brazilian Superior Court of Justice: Can a Creditor Stay Out of Judicial Reorganization If Not Listed in the General List of Creditors?

In a decision rendered on May 25, 2021, in Special Appeal No. 1.851.692, the Fourth Panel of the Brazilian Superior Court of Justice (“STJ”) decided that the holder of a credit who is voluntarily excluded from the reorganization plan has the prerogative of deciding whether to present a proof of claim so that its credit is subject to the judicial reorganization plan or to file for individual execution after the judicial reorganization proceeding ends.

This special appeal was filed against a decision rendered by the State Court of Rio Grande do Sul that determined the credit could be updated up to the date of the filing of the judicial reorganization and the presentation of a proof of claim.

The main arguments raised by the creditor in the special appeal were (i) the creditor should have the option of filing the late proof of claim after the confirmation of the general list of creditors even if the credit is one subject to the effects of the judicial reorganization proceeding; (ii) the credit in question was not listed in the general list of creditors, and there was no reservation of the credit by the bankruptcy trustee; and (iii) the creditor, which does not intend to subject its credit to the judicial reorganization plan, could proceed with the individual collection of its credit after a period of two years (a period of supervision by the Bankruptcy Court).

The reporting minister, Luis Felipe Salomão, concluded that whether to subject the credit to the judicial reorganization proceeding would be up to the creditor’s discretion, referring to a decision rendered in Jurisdiction Conflict no. 114.952/SP, in which the Second Section of the STJ decided that "the subjecting of the credit is a responsibility of the creditor, but is not imposed on him."

Minister Maria Isabel Gallotti concurred with the opinion of Reporting Minister Salomão and concluded that it is possible for the creditor to proceed with the execution of its credit after the termination of the judicial reorganization. However, Minister Gallotti added that, in this case, the creditor will have the benefit of all contractual interests during the period, as well as the possibility to demand the totality of the amounts.

This excerpt from the decision suggests that the creditor, if not listed by the debtor nor the bankruptcy trustee, would be able to voluntarily opt for the subjection (or not) of its credit to the effects of the judicial reorganization plan, which could lead to a different treatment of creditors of the same class, in violation of the par condition creditorium principleand a violation of article 172 of Law no. 11,101/05.

In addition, this interpretation can be taken as contrary to the literal wording of article 49, main section of Law 11,101/2005, which states that the claims existing on the date of the filing are subject to the effects of judicial reorganization, even if the debt has not yet matured.

This STJ decision has been challenged through the filing of a motion for clarification by Oi Group (debtor), which is still pending judgment. According to Oi Group, the decision was silent on whether creditors that choose not to include their claims in the judicial reorganization would have to wait for the fulfillment and payment of all the creditors subject to the judicial reorganization plan.

Therefore, we must wait for future decisions of the Superior Court on this matter to confirm whether the position consolidated in the Appellate Decision of REsp 1851692 will prevail despite the issues it raises.

Our team is available to answer any questions regarding this decision.