The judiciary should not interfere in the economic viability of the recovery plan.

It is not within the purview of the Judiciary to interfere in matters relating to the financial viability of a judicial reorganization plan. In principle, the control to be exercised is purely legal, in order to prevent the approval of clauses contrary to the law.

With this understanding, the 1st Chamber of Business Law of the Court of Justice of São Paulo unanimously denied the appeal of a creditor against the approval of the judicial reorganization plan of Viação Itapemirim. The creditor questioned the economic viability of the plan.

The rapporteur, Judge Azuma Nishi, stated that the approval of the judicial reorganization plan is a "novative legal transaction," through which the decision taken by the majority, respecting the quorums provided for in the legislation, binds the other creditors.

"Despite the principle of private autonomy being in effect, the decisions made in assembly must observe the mandatory rules stipulated in the Judicial Reorganization Law, as well as those of common law, especially the rules of public order. In short, the insurrection of a particular creditor dissatisfied with the plan does not give rise to the annulment of the judicial reorganization plan," he said.

Regarding the creditor's allegations concerning the possible depletion of the debtor's assets, Nishi stated that the Judiciary's role is limited to analyzing provisions that directly violate the law, which is not the case here: "The judge should not delve into aspects of economic viability, which reflect the sovereign will of the general assembly of creditors."

Case 2128074-77.2019.8.26.0000

Source: Conjur