The Trustee is an individual or a legal entity (for legal entities, the name of the person responsible for conducting the bankruptcy or court-supervised reorganization case must be declared and they cannot be replaced without authorization from the judge) appointed by the court for the purposes of handling Court-supervised Reorganization and Bankruptcy cases.

​A Trustee is someone qualified, preferably a lawyer, an economist, business manager or an accountant, or a specialized legal entity. The Court of Justice of the State of Rio de Janeiro has been requiring Trustees to get qualified by attending training at ESAJ – School of Trustees.

Court-supervised reorganization prevents a company from going bankrupt. It is an option for companies to restructure, whereby they are able to renegotiate liabilities and propose changes to repair a momentary scenario of hardship. ​

Phase 1 – Court-Supervised Reorganization Petition (Art. 51)

​Phase 2 – Judge grants the Reorganization (Art. 52)

​Phase 3 – The case processing time begins.

1. A) Publication in the Official Register.
2. B) Beginning of the time (15 days) to present credit claims and disputes to the Trustee. (Art. 7, §1 and Art. 9)
3.     C) Beginning of the time (60 days) for the debtor to present the Court-Supervised Reorganization Plan. (Art. 53)

​

Phase 4:

1.     D) Trustee Publishes a List of Creditors (Art. 7, §2)
2.      E) Beginning of the time (10 days) for filing objections against the List of Creditors presented by the Trustee (Art. 8) 
3.     F) Final date for publishing the Court-Supervised Reorganization Plan. (Art. 53)
4.     G) Beginning of the time (30 days) for any creditor to state, to the judge, an objection to the Reorganization Plan. (Art. 55)

​

*If there is no objection to the Plan, the judge will grant the debtor’s Reorganization. (Art. 58)

If there is an objection to the plan within 30 days after the publication, a Meeting of Creditors must be convened. (Art. 56)

​

Phase 5 – Meeting of Creditors* – Held within 150 days after the Reorganization is granted. (Art. 56 §1)

   If the Plan is approved:

1.     H) The Judge will grant the debtor’s Court-Supervised Reorganization. (Art. 58)

   If the Plan is not approved, the Judge:

58.     I) May grant the court-supervised reorganization pursuant to art. 58. (Art. 58, §1)
59.     J) May declare the debtor bankrupt. (Art. 56, §4)

​It is a legal solution that occurs when a company’s financial situation makes it unable to fulfill its obligations while maintaining its activities. Therefore, the only solution is to liquidate all of the bankrupt’s assets to pay off the debts.

A Trustee plays an essential role in the case. The Trustee’s duties are expressly laid down in art. 22 of Law 11101/2005. Importantly, the Trustee’s roles in Bankruptcy and in Court-Supervised Reorganization cases are clearly different, as noted below:

• Court-Supervised Reorganization​

Despite the company’s hardship, it is still viable and protected by the Brazilians law to resume its activities in a healthy manner by seeking to preserve its social function and continue its business.

The main duty of the Trustee is to supervise the debtor’s activities and comply with the court-supervised reorganization plan. The Trustee may file for the company’s bankruptcy if it fails to comply with the plan or with any other statutes or regulations. It is also the Trustee’s duty to present to the judge a monthly report of the debtor’s activities, to be attached to the records.

We believe that the creditors’ relationship is extremely important for the trustee to get information about their credits and the current stage of the case. The Company’s Reorganization plan must be tracked, but Law 11101/2005 makes it clear that no intervention in the company’s management is allowed, unless the managers and other executives fail to abide by the laws.

• Bankruptcy

The company has demonstrated that it is not able to continue operations and that the best solution is to honor all or a part of its debts by liquidating all of its assets.

In bankruptcy, the trustee is in charge of managing the bankruptcy estate. The trustee has to collect and look after all the assets of the bankrupt estate in order to liquidate the assets at the best price possible (liquidation usually takes place via auctions) to pay off as much as possible of the credits due. 

During this period, information on credits and the current stage of the case must be provided to the creditors and the credits left by the bankrupt company must be assessed using all available tools.

​If the amount informed in the letter matches your actual credit, you do not need to do anything. Your credit has been claimed and it is only necessary to track the case.

 If any information about the credit amounts, nature, corporate name and/or classification appearing in the letter is wrong, the creditor must contact the Trustee and present all relevant documentation to support their claim, within the legal period.

The list of creditors disclosed by the Company being Reorganized or by the Debtor is published in the federal register with the notice. The list of creditors can be found in the records and is made available at the notary of the court in which the Court-Supervised Reorganization or Bankruptcy is in progress.

​Some trustees provide the list of creditors in their information channels. Our law firm has included a section for reports and relevant information about the cases it handles at its website.

​If the amounts informed are not right, or are not included in the case, the creditor must make a claim, as follows:

​· Credit dispute

This is when the amount published on the list is at odds with what the creditor is entitled to.

• Credit claim

This is when the creditor is not listed.

​Pursuant to Art. 7, item I, the creditor has 15 days from the publication of the list of creditors in the federal register to file a request for credit dispute or claim and submit it to the Trustee. At expiration of the time, the creditor must file a request for claiming or disputing credit in the case records. Below are the documents required for credit claims and disputes:

​I – creditor’s name, address, and the address where they will receive correspondence about the current stage of the case;

II – the credit amount adjusted for inflation up to the date of the bankruptcy adjudication or the reorganization petition date, as well as its origin and classification;

III – evidence of the credit and description of other evidence to be produced;

IV – description of the guarantee provided by the debtor, if any, and the relevant instrument;

V – specification of the guaranteed asset held by the creditor.

Pursuant to Article 7, Subsection II, the Trustee will publish the list of creditors within 45 days from the end of the period established for creditors to present their claims and disputes to the Trustee (15 days from the publication of the List of Creditors). 

​Payments are made in different ways in Bankruptcy and in Court-Supervised Reorganization:

• Bankruptcy

There is a joinder of creditors, that is, the payment must respect the order pursuant to art. 83 and 84 of Law 11101/2005. While the case is pending, payment can be made by apportionment, using the balance of asset disposals respecting the order appearing in the List of Creditors.

​

• Court-Supervised Reorganization

Payments follow the provisions set forth in the Court-Supervised Reorganization Plan. The way in which the creditors will be paid requires approval at a Meeting of Creditors and must be later approved by the Court.

According to Art. 37, §2 of Law No. 11101/2005, the Meeting is only held upon the 1st call with the presence of creditors holding more than half of the amount in credits of each class. On the 2nd call, it can be held with any number of attendees.

​The plan is voted by each class of creditors. Pursuant to Art. 41, §1 and 42 of Law 11101/2005, the proposal must be approved by creditors representing more than half of the total amount of the credits held by creditors attending the Meeting and also by the simple majority of creditors holding credits of class II and III. 

According to §2 of Art. 45 of Law 11101/2005, the proposal must be approved by the simple majority of attending creditors holding credits of classes I and IV

​Creditors must keep track of the case. The only moment where creditors are informed of any acts related to the case is upon receipt of a letter from the Trustee, pursuant to art. 22, item I, subparagraph “a” of Law 11101/2005, which contains basic information about the case and the credit listed in the List of Creditors presented by the Company being Reorganized or by the Debtor. All other information and updates are published in the Federal Register.

For a better relationship with creditors, Marcello Macêdo Advogados provides relevant information about its cases through reports on its website. The Trustee also has a duty to assist creditors by answering questions about their credits or about the current state of the case.