11/09/2019News
Judicial Reorganization Brings Legal Security to Rural Producers
Judicial reorganization brings legal security to rural producers, says lawyer Guilherme Caprara.
Although there are signs of market recovery, there is no denying that Brazil is going through a severe economic crisis that began in 2014, with a sharp contraction in Gross Domestic Product (GDP) in 2015 and 2016 and minimal growth in subsequent years. The economic and social consequences cannot be ignored and affect practically all productive sectors, including agribusiness, which is responsible for almost 30% of the national GDP.
The exploitation of agricultural activity is often carried out by small family units, without registration with the commercial registry, which, consequently, do not operate, according to the provisions of the civil code , as companies or entrepreneurs. Initially, this observation may seem irrelevant, but the fact is that, unlike those who operate in agribusiness as companies, individual rural producers, even facing financial difficulties, could not, in theory, resort to the remedy of judicial reorganization for their reorganization and preservation of their social function. This is because the law requires, as a condition, precisely, the regular exercise of the activity as an entrepreneur for a period exceeding two years, a declaration obtained through registration with the commercial registry.
The discussion regarding the possibility of rural producers availing themselves of the remedy of judicial reorganization has generated great controversy among producers and creditors, magistrates and lawyers. Recently, due to the evolution of precedents issued by the country's highest courts, the understanding favorable to rural producers has been consolidated in the sense that the right to reorganization is recognized, even if they have not been registered as a business owner for more than two years.
The sector is calling for a solution that provides legal certainty and enables all those engaged in regular business activity to have legal ways to overcome the crisis situation in an equitable manner.
More recently, and also in a way that favors producers, statements 96 and 97, which address the topic, were approved at the 3rd Commercial Law Conference of the Federal Justice Council in June in Brasília. The sector is calling for a solution that provides legal certainty and that allows, in an equitable manner for all those who carry out regular business activity, legal ways to overcome the crisis situation; therefore, the emergence of these statements is very timely and of great relevance to future judgments on the matter.
Guilherme Caprara
Lawyer specializing in judicial reorganization.