Page 70 - Demo

Doing Business in Brazil
other countries, such as Germany, Switzerland, Austria and the US, where the civil debtor can also be adjudicated bankrupt.
Once the adjudication of bankruptcy is granted by the bankruptcy court, the debtor and their creditors are placed in the so-called bankruptcy legal regime, in which the debtor is removed from their activities. The bankrupt is not able to exercise
any business activity until the final decision is rendered extinguishing their obligations. For this period, the judge appoints a Court Administrator to represent the bankrupt debtor before lawsuits, present a report with causes and circumstances that led to the bankruptcy situation, appointing the civil and criminal liability of those involved if it is the case, provide
all information requested by the interested creditors, among other duties provided in the Bankruptcy Law.
The Court Administrator is also responsible for the compilation of
all creditor in a list, describing their credit amount and nature. This
list is essential in the Bankruptcy proceedings as the nature of each credit will be decisive to the order of distribution to creditors, i.e., which credits are paid first. The Bankruptcy Law provides the legal order of distribution that shall be comply by bankrupt debtors:
i. labour related claims, limited to one hundred and
ii. fifty monthly minimum wages 70
per creditor, and
iii. occupational claims;
iv. claims with in rem guarantees, to the limit of the
v. value of the encumbered asset;
vi. tax claims, regardless of their
nature and length of
vii. constitution, except for tax fines;
viii. claims entitled to special privilege;
ix. claims entitled to general privilege;
x. unsecured claims;
xi. contractual penalties and fines
for breach of
xii. criminal or administrative law, including tax
xiii. related fines;
xiv. subordinated claims.
It is important to mention that the company is under bankruptcy and not their partners. In this sense,
only debtor’s assets, once collected and liquidated, will be unlimited considered to pay all creditors observing the order of distribution above. However, in the case of jointly and unlimited liable of debtor’s partners, their private assets may also be collected. The assets of quota holders, managers, and shareholders