Brazil: The Treatment Given To Credits Secured By Fiduciary Assignment In The Judicial Recovery Plan Of A Brazilian Company

Last Updated: 22 February 2013
Article by Walter Stuber

The Fourth Chamber of the Brazilian Superior Court of Justice (Superior Tribunal de Justiça – STJ) ruled that credits secured by fiduciary assignment (cessão fiduciária) of receivables are not subject to the judicial recovery plan of a Brazilian company1. On February 5, 2013, the Judges of STJ unanimously understood that the fiduciary assignment falls in the category of movable property (bem móvel) as defined in item III of article 83 of the Brazilian Civil Code (Law No. 10406, of January 10, 2002), so that it is one of the exceptions provided for in paragraph 3 of article 49 of Law No. 11101, of February 9, 2005 (the Brazilian Corporate Recovery Law). This was the first decision taken by STJ about this matter.

In accordance with article 83 of the Brazilian Civil Code, for legal purposes, "movable property" comprises: (i) the energies that have economic value; (ii) rights in rem over movable objects and corresponding actions; (iii) patrimonial personal rights and their respective actions.

Article 49 of the Brazilian Corporate Recovery Law establishes the general rule - all claims existing on the date of the petition applying for the judicial recovery plan are subject to such plan, even if not yet due. The few exceptions admitted by law are expressly contemplated in paragraph 3 of said article 49, as follows:

"Paragraph 3. - In the case of a creditor holding the position of fiduciary owner of real or personal property, financial lessor, owner or committed seller of real estate whose respective agreements include an irrevocability or irreversibility clause, including under real estate developments, or an owner under a sale agreement with title retention, his claim shall not be subject to the effects of the judicial recovery plan, and the ownership rights over the item and the agreement terms shall prevail, with due regard for the respective law; during the suspension term under article 6, paragraph 4, hereof2, however, it shall not be permitted to sell or remove from the debtor's establishment any capital goods essential to his business."

The judicial recovery plan in Brazil is a court-supervised proceeding aimed at enabling debtors to overcome an economic and financial crisis based on a reorganization plan negotiated with and approved by its creditors.

The fiduciary assignment of rights over movable things (cessão fiduciária de direitos sobre coisas móveis), including credit instruments (títulos de crédito), as a guarantee (collateral) for transactions made in the Brazilian financial and capital markets, is permitted by force of the provisions of paragraph 3 of article 66-B of Law No. 4728 of July 14, 1965, as amended by article 55 of Law No. 10931, of August 2, 2004. In this case, unless otherwise specified by the parties, the direct and indirect ownership of fiduciary property of the goods or instruments evidencing the rights or credits is attributed to the creditor. In the event of default of the secured obligation by the debtor, the creditor can sell to a third party the goods or instruments object of the fiduciary property, regardless of any auction (leilão), public sale (hasta pública) or any other judicial or extrajudicial measure. The funds obtained with the sale of the goods or instruments will be used to pay the total value of the credits and expenses related to the performance of the guarantee, and the balance, if any, will be delivered to the debtor, accompanied by a statement of all the amounts incurred in connection with the transaction. This is a very favorable treatment compared to the other creditors that are subject to the judicial recovery plan.

This mechanism is also known as "wire lock" (trava bancária) because it aims to protect the creditor secured by fiduciary assignment of receivables, which receives a different treatment from the other creditors that are subject to the judiciary recovery plan pursuant to the rules established by the Brazilian Corporate Recovery Law.

In the case at hand, the Special Appeal was filed by a Brazilian financial institution (Banco Bradesco S.A.) against a decision issued by the Court of Appeals of the State of Espírito Santo (Tribunal de Justiça do Espírito Santo – TJ/ES), which concluded that the corresponding values were subject to the judiciary recovery plan, because they were not contained in the list of exceptions set forth by paragraph 3 of article 49 of the Brazilian Corporate Recovery Law. The 2nd Circuit Court of the City of Linhares, in the State of Espírito Santo, previously determined the inclusion in the judicial recovery plan involving a furniture industry company (Indústria de Móveis Movelar Ltda.) of certain banking credits that were secured by fiduciary assignment of trade bills (duplicatas mercantis) for the benefit of the Brazilian debtor and against the creditor.

According to the STJ, the Brazilian Corporate Recovery Law excludes certain cases from the effects of the judiciary recovery plan and among them "the creditor holding the position of fiduciary owner of real or personal property". The Reporting Judge Maria Isabel Gallotti declared that her interpretation of the term "movable property" is based on article 83 of the Brazilian Civil Code, which refers to "patrimonial personal rights and their respective actions".

This is an important court precedent for the banking industry. The Reporting Judge admitted that the legislative option puts the banks in a privileged situation in relation to the other creditors and hinders the judicial recovery plan. However, it would not be possible to ignore the strong expectation of return of capital due to this type of guarantee, which permits funding with lower risk rate, inducing the decrease of the banking spread, and benefits the business activity and the national financial system as a whole.

Following in part the Reporting Judge, Judge Luis Felipe Salomão noted that the rights of the fiduciary owner must be protected, but it is the court in charge of the judicial recovery plan that should evaluate the essentiality of the values necessary for the operation of the company in order to balance the guarantee given to the creditor (the bank) and the needs of the company undergoing a judicial recovery plan. According to Judge Salomão, to protect the debtor (the company), the cash should be judicially deposited and requested by the debtor in accordance with the needs of cash flow to operate the company. He argued further that even in the case of credits secured by fiduciary alienation (alienação fiduciária), the acts that imply in expropriation measures shall be taken by the court in charge of the judicial recovery plan. The other Judges, however, decided not to adopt his conclusions, and repeated the vote of the Reporting Judge. Otherwise the banks would always be adversely affected because for a company undergoing a judicial recovery plan any cash is necessary and would never be released and the perverse consequence would be the increase of the banking spread of the loans.

Therefore, based on this court precedent, any creditor secured by fiduciary assignment of receivables is holding the position of fiduciary owner of personal property and is not subject to effects of the judicial recovery plan of the debtor.


1 Special Appeal (Recurso Especial) No. 1263500, having Banco Bradesco S.A. as Appelant (Recorrente) and Indústria de Móveis Movelar Ltda. as Respondent (Recorrido), and as a Reporting Judge (Ministra Relatora) Maria Isabel Gallotti. The decision has been issued on February 5, 2013 and will be available in due course at the STJ website.

2 Article 6 and its paragraph 4 of the Brazilian Corporate Recovery Law establishes that:

"Article 6. - A decree of bankruptcy or granting of judicial recovery plan processing tolls the course of the statute of limitation and of all actions and executions against the debtor, including those of private creditors of the jointly liable partner.


Paragraph 4. - Under judicial recovery plan, the suspension provided for in the main section of this article shall in no event whatsoever exceed the non-extendable term of one hundred and eighty (180) days as from granting of processing of the recovery plan, the creditors' right to commence or continue their actions and executions being reestablished after the term has elapsed, independently of a judicial pronouncement."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Walter Stuber
Similar Articles
Relevancy Powered by MondaqAI
Walter Stuber Consultoria Jurídica
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Walter Stuber Consultoria Jurídica
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions