Bill in the Chamber of Deputies creates controversy and vote is postponed.

The bill that creates a "System for Preventing Insolvency" for companies during the state of public calamity due to COVID-19, a stage preceding judicial reorganization, received support from political parties, but points of the proposal caused disagreements and postponed the vote, which was rescheduled for Wednesday.

Congressman Hugo Leal (PSD-RJ), who is the rapporteur for the bankruptcy and judicial reorganization law reform bill, presented a text last month with specific measures for the pandemic period. The idea is to give companies the conditions to renegotiate debts before resorting to the judicial system with a judicial reorganization plan. However, the proposal has drawn criticism for suspending, for 60 days (extendable for another 60 days), the judicial or extrajudicial enforcement of guarantees, evictions for non-payment, the unilateral termination of bilateral contracts, and the collection of fines from companies or individuals engaged in economic activity.

In a video conference yesterday with the Speaker of the House, Rodrigo Maia (DEM-RJ), the president of the Brazilian Association of Shopping Centers (Abrasce), Glauco Humai, said that he is creating a four-month moratorium. "Many contractual issues are already being resolved privately; they don't need legislative intervention," he stated.

Maia responded that this concern led to the postponement, but that there is a great deal of pressure to vote and create an emergency instrument to preserve companies. "But it cannot be a project that tries to solve one problem and creates others," he said. He highlighted Congressman Isnaldo Bulhões (MDB-AL) as the rapporteur for the proposal.

Congressman Lafayette de Andrada (Republicanos-MG), one of those who requested the postponement, said there is no consensus. “Some lawyers and businesspeople support it, and others criticize it. But it’s an important project, and we will vote on it. There will be a flood of bankruptcies after the pandemic, and the bill creates a system of settlement between the parties before the courts,” he stated.

Given the disagreements, Maia suggested that parties vote on the original bankruptcy law reform bill as an alternative. In the Senate, the debate is also taking place on a bill by Senator Álvaro Dias (Pode-PR), which has been placed on the priority list.

Source: Economic Value