On May 6, 2014, Brazil's Superior Court of Justice (STJ) ruled that creditors who do business with a company that had its reorganization petition granted must have priority over the other creditors if the reorganization turns out to be infeasible and the case is converted into bankruptcy.
This was the position of the Third Panel of the STJ that partially granted a special appeal (Case No. 1398092 / SC) regarding a creditor's motion to have his claim recognized as first priority. Under Section 84 of law No. 11,101/05, first priority claims have preference in the order of payment with relation to the general claims listed in section 83 of that law.
In trial and in appellate courts, the prevailing opinion was that this claim should be classified as an unsecured claim, under the argument that only the claims made after the granting of the benefit had priority. However, the other STJ justices followed the opinion of the rapporteur, Nancy Andrighi, who considered as first priority any claims made against the company as from the decision that authorized the court-supervised reorganization to be processed.
According to the rapporteur, the point in time from when a claim was to be recognized as first priority was the decision that granted the request for the court-supervised reorganization to be processed because this is the act that triggers the main effects of the court-supervised reorganization. Among other things, that is when the company's economic distress is made public.
From that moment on, the company loses productive capacity due to the distrust of suppliers and customers. Ensuring precedence in the payments' order is a way to compensate those who take the risk and actively participate in the recovery process of a company in distress.
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