Brazil: Step-In Rights And The New Airport Concessions

In a scenario of great uncertainty about the outlook for the Brazilian economy, private investment in infrastructure is bound to play a key role in compensating the shortage of State investments and hence help overcome the economic downturn. Appropriate guarantees to lenders in connection with project finance are a key element in this regard.

Project finance mechanisms enable the dilution of risks associated with infrastructure projects. They allow lenders to rely on cash flow and assets from a project as primary sources of payment and as collateral for the invested capital.

Article 27-A of the Law of Concessions (Law No. 9,987, of February 13, 1995), introduced in January 2015, provides for "step-in rights" – namely, the possibility for lenders and guarantors to take control or temporary administration of the concessionaire of infrastructure projects in order to promote financial restructuring and to ensure the continuity of services.

Step-in rights and project finance are closely associated mechanisms, as the ability to take control or temporary administration of a project (step-in right) is particularly relevant in project finance transactions, where the continuity of the enterprise is more advantageous to the creditor than foreclosing the collateral involved in the transaction. Typically, the company's assets are worth less than the debt incurred to acquire them.

Step-in rights provisions are not commonly adopted in Brazil. However, they do feature in several concession agreements of airports, such as São Gonçalo do Amarante, Brasília, Guarulhos, Viracopos, Galeão and Confins. Airport infrastructure projects are well suited for the mechanism, to the extent they require high investments; and involve a predictable cash flow.

The National Civil Aviation Agency (Anac) is the relevant authority responsible for the concession of the exploitation of aeronautical and airport infrastructure, and for authorizing transfers of corporate control under existing concession contracts.

The step-in can occur through the lenders taking corporate control or temporary administration. The latter enables the lender or guarantor to define the concessionaire's strategic guidelines (to indicate members of the – board of directors or audit committee, for example) without, however, having corporate control. Temporary administration does not entail liability of lenders and guarantors in relation to tax, labor and other obligations towards third parties, including the relevant concession authority or employees (Article 27-A, §5 of the Law of Concessions).

The change of control, in turn, is provided by Article 17 of Decree No. 7,624, of November 22, 2011. This provision authorizes the assumption of corporate control of the company by creditors for the purposes of implementing financial restructuring and to ensure the continuity of services.

Although the legal text only provides for the step-in right through the change of control, temporary administration is not excluded. This is because the relevant legal provisions (i) also refer to the Law of Concessions, which allows temporary administration; (ii) have been drafted before the rules in the Law of Concessions which introduced step-in through temporary administration, and should now be construed more broadly.

The transfer of the concessionaire's control depends on the prior consent of Anac and the failure to observe this requirement can result in the expiration of the concession1. It remains an open question, however, whether it would be possible to obtain the final authorization in favor of the financers prior to the default hypothesis that can trigger the step-in rights – the idea is that, in case of default, the step-in occurs automatically, without interference from government agencies.

This will depend on the requirements for the implementation of the step-in rights provided by the Law of Concessions and by Anac's rules. Regarding the Law, there is nothing in its text which prevents the previous and hypothetical authorization. As for Anac, the agency has not published any regulation on the implementation of the step-in rights in the sector yet.

However, the concession agreements already entered into by Anac determine that the financer should submit the documents required by the agency at the time of the change of control/administration to be approved (such as documents which prove the financial capacity), thus excluding unconditional prior step-in approval.

Naturally, agreements apply to a specific concession. Thus, nothing prevents future agreements from modifying the requirements for the submission of documents at the time of the step-in event, considering there is no rule preventing the prior and hypothetical consent to the step-in rights.

The provision of the step-in rights can stimulate fearful financers who intend to invest in the Brazilian air transport infrastructure. Given the sector's growth and the Olympic Games in Rio de Janeiro later this year, private interest in new projects tends to be high. While Infraero2  is seeking partners from the private sector for expansion of the passenger's terminal3  and for the concession of the commercial area4  of the Congonhas airport (SP), the Federal Government has recently revealed an investment program in logistics involving the concession of the airports Pinto Martins, in Fortaleza (CE); Luiz Eduardo Magalhães, in Salvador (BA); Hercílio Luz, in Florianópolis (SC); and Salgado Filho, in Porto Alegre (RS)5.


1 The Government terminating the contract as a result of the concessionaire's breach of obligation.

2 Brazil's state-owned airport infrastructure company.




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.

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
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