It is up to the bankruptcy court to decide on the seizure of assets of a company that is also facing tax enforcement proceedings.

The Second Section of the Superior Court of Justice (STJ) reaffirmed the understanding that it is the responsibility of the bankruptcy court to order measures to seize the assets of a company subject to the bankruptcy proceedings, regardless of whether there is a tax enforcement proceeding underway against it.

Based on this jurisprudence, the panel denied an appeal by the National Treasury against a decision by the rapporteur, Minister Luis Felipe Salomão, who declared the bankruptcy court competent to carry out enforcement actions related to the assets of an economic group composed of hotel companies.

The jurisdictional dispute arose after the federal court ordered the seizure of assets in the tax enforcement proceedings. According to the group, this circumstance constituted an encroachment on the jurisdiction of the tax recovery court.

Established case law

Minister Salomão emphasized that the established jurisprudence of the Second Section is that "no court other than the court overseeing the judicial reorganization can order measures to restrict the assets of a company undergoing reorganization," despite the literal wording of article 6, paragraph 7, of Law 11.101/2005, according to which the processing of tax enforcement proceedings is not suspended during the reorganization procedure.

According to Salomão, the understanding reached by the panel has not changed even after the enactment of Law 13.043/2014, which established a special installment plan for companies undergoing judicial reorganization – a benefit that, in theory, would have the effect of suspending the enforceability of the tax credit of the company undergoing reorganization.

Citing precedents, the rapporteur emphasized that, although the continuation of tax enforcement proceedings and any potential appeals must take place before the competent federal court – which will be responsible for all procedural acts, including the order for summons and seizure – "control over restrictive acts against the assets of the company undergoing judicial reorganization is the responsibility of the court overseeing the judicial reorganization, in view of the fundamental principle of preserving the company."

Case Number: CC 159771

Source: STJ