Brazil's Supreme Court confirms that a Certificate of No Debt is no longer an obstacle to Judicial Reorganizations.

In a decision this Thursday afternoon (November 3), the Supreme Federal Court (STF) dismissed the Constitutional Claim in which the Federal Government defends the need for Tax Clearance Certificates (CNDs) for the granting of judicial reorganizations.

The rapporteur for the case, Minister Dias Toffoli, understood that the matter refers to infraconstitutional issues, so it is up to the Superior Court of Justice (STJ) to address the legality or illegality of the rule. According to lawyer Gabriel Gehres, from Cavallazzi, Andrey, Restanho & Araujo Advocacia, "the decision brings peace of mind to companies that were awaiting a ruling from the Supreme Federal Court (STF) to have their judicial reorganizations granted."

Attorney Fernando Cascaes, from the same firm specializing in judicial reorganizations, emphasizes that the decision was highly anticipated because "the Superior Court of Justice (STJ) has already ruled that presenting a tax clearance certificate (CND) is not required for granting judicial reorganization, based on the principle of preserving the company – as an economic activity – and the non-subjection of tax credits to the judicial reorganization regime."

The decision mentioned by the lawyer refers to a ruling by the Third Panel of the Superior Court of Justice (STJ) in Special Appeal 1.864.625/SP, whose summary, among other points, states:

[…]
The country's economic reality reveals that companies in crisis usually have outstanding tax debts, and it can be said that obligations of this nature are the first to be left unpaid, especially when considering the high tax burden and the complexity of the current system. 5. Given this context, the presentation of tax clearance certificates by a debtor seeking judicial reorganization of their company presents a difficult challenge.
[…]

Security for debtors

According to lawyer Marcos Andrey de Sousa, a member of TMA Brasil – Turnaround Management Association, "the waiver of negative clearance certificates provides security to debtors who need judicial reorganization but, due to tax debts, had been postponing their restructuring request."

Complaint number 43,169

Source: JusCatarina