Welcome to “Management in Focus,” the monthly bulletin from Galeazzi & Associates. At the close of each month, we deliver exclusive analyses, key topics, and the informed perspectives of Galeazzi & Associates on the forces shaping the market and business landscape. Our goal is to enrich your strategic planning and decision-making with the insights and expertise of our team.

On the 27th, the Chamber of Deputies passed Bill 03/2024, which seeks to refine the bankruptcy framework for entrepreneurs and business entities. The bill, proposing amendments to the Bankruptcy and Corporate Recovery Law (Law 11.101/2005), was expedited under an urgency clause, stirring considerable legal uncertainty in a process that is already intricate for companies and the broader business ecosystem.

Insights from TMA Brazil and the CRM - Center for Women in Business Restructuring, as shared by our executive directors, suggest that the bill could significantly complicate bankruptcy and judicial recovery proceedings nationwide. A notable concern is the exclusion of the legal community from discussions to enhance the bill post-substitution, which ultimately passed. There’s an apprehension that its enactment may inject further legal uncertainty into Brazil’s insolvency framework, shortly after a comprehensive reform of the law that has yet to be fully tested.

Congresswoman Dani Cunha (União-RJ), the bill’s rapporteur, contends that the proposal will streamline processes, reduce bureaucracy, and bring ethical practices to bankruptcy proceedings. This is in light of bankruptcies in Brazil that can extend beyond two decades. The bill introduces a structured bankruptcy plan and the role of a fiduciary manager to facilitate asset sales through auctions.

While the legislators defend that the bill will accelerate bankruptcy procedures and creditor settlements, we are concerned that the benefits may skew towards larger creditors, such as banks, investment funds, and asset managers, potentially affecting the impartiality and transparency of payments. Some of the proposed regulations could even hinder the restructuring of viable businesses, particularly impacting small and medium-sized enterprises.

We will keep a close watch on this development and advocate for the involvement of the legal and specialized community in the Senate’s deliberations. It is essential that their concerns and critical insights are considered to ensure that the Bankruptcy Law accurately reflects the realities faced by companies at a pivotal juncture in their survival.

Enjoy the read!