Sale of isolated productive units (UPIs) in judicial reorganization must be done through public auction, STJ rules.

The Superior Court of Justice (STJ) has ruled that the sale of isolated productive units (UPIs) in judicial reorganization must be carried out through public auction, but, in exceptional situations, other methods provided for in Law No. 11,101 of 2005 may be used.

In this scenario, according to the 3rd Panel, the terms of the deal must be meticulously described in the recovery plan – with a separate vote – and must be approved by a substantial majority of creditors, with judicial ratification.

The decision was given in an appeal (REsp 1689187) filed by a creditor against a decision that approved an addendum to the judicial reorganization plan, which provided for the sale of UPI in a manner other than public auction.

Before the Superior Court of Justice (STJ), the creditor stated, among other points, that this addendum provided for the sale of assets and property, which was carried out through a direct sale to a Spanish group, without notifying the Public Prosecutor's Office and in violation of the measures established in article 142 of the Bankruptcy and Reorganization Law.

In his vote, however, the case rapporteur, Minister Villas Bôas Cueva, understood that, although holding a public auction is more appropriate to guarantee transparency and competition in the sale of productive units, "there are situations in which flexibility in the form of sale, under the terms of article 145 of the LRF (Fiscal Responsibility Law), is the only way to make the sale viable."

Source: Valor Econômico