With the economy stalled, requests for judicial reorganization increase by 83.3% in Alagoas.

A survey conducted exclusively by Gazeta de Alagoas with the Court of Justice of Alagoas (TJ/AL) shows that, with the economy stalled, the number of requests for judicial reorganization and bankruptcy increased by 83.3% from March to April in the state. However, compared to the same period last year, there was a 54% reduction.

According to the figures, last April 11 companies entered into judicial reorganization or bankruptcy proceedings in Alagoas. In the previous month, March, six companies entered such a situation. In April 2019, the number of companies that filed for such proceedings in Alagoas was 24. As of last Wednesday, the 20th, no company in the state had requested judicial reorganization or bankruptcy in the month of May.

Since March 21st, most businesses in Alagoas have faced a shutdown of their activities. Businesses that offer products or services considered non-essential are not allowed to physically open their doors.

A survey by the economic advisory department of the Federation of Commerce of the State of Alagoas (Fecomércio) indicates that, excluding essential services not affected by the suspension, an estimated daily loss of R$ 53 million is expected in the Commerce and Services sectors. According to Fecomércio, the tertiary sector (Commerce and Services) represents 49% of the Gross Domestic Product (GDP) in Alagoas, employing 66% of formal workers and accounting for 83.33% of existing businesses, and representing 44% of the revenue from the Tax on the Circulation of Goods and Services (ICMS) in the State.

A monthly survey by the company Serasa Experian shows that in April, 120 requests for judicial reorganization were registered throughout the country, a 46.3% increase compared to March. Meanwhile, bankruptcy filings totaled 75, a 25% increase compared to the previous month.

According to economist Luiz Rabi from Serasa Experian, due to social isolation and restrictive measures, many registry offices and courts did not function normally, causing a backlog in the number of requests. Because of this and the strong recession, he predicts an avalanche of requests this year and a return to the record levels observed during the 2016 economic crisis. "With the recession setting in and the difficulties that various sectors are experiencing, both the number of bankruptcies and judicial reorganizations are expected to increase. Regardless of the length of isolation, the impacts on the economy have already occurred and will take time to be fully overcome," says the expert.

Data from Serasa shows that during periods of crisis, small businesses are the most vulnerable and most impacted by insolvency proceedings. Of the 120 requests for judicial reorganization filed in April, 53 were from micro and small businesses, 44 from medium-sized businesses, and 23 from large businesses. From January to April, of the 377 cases in the country, 226 involved small businesses, 99 medium-sized businesses, and 52 large businesses. In the 75 bankruptcy filings, 39 were against micro and small businesses, 20 against large businesses, and 16 against medium-sized businesses. In the accumulated total for the year, of the 315 requests, 173 involved small businesses, 85 large businesses, and 57 medium-sized businesses.

Analyzing by sector, the Serasa survey reveals that the service sector was the most impacted, with the number of requests for judicial reorganization jumping from 44 in March to 92 in April. In the same month last year, there were 56. In commerce, there were 13 requests in April, in industry, 12, and in the primary sector, 3.

Source: Gazeta Web