Bankruptcy and Insolvency - Chapter 11 - Doing Business in Brazil
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Bankruptcy and Insolvency
11.101 A debtor is considered to be insolvent when his debts exceed the value of his assets. An insolvent debtor who is not engaged in trade is subject to the procedure of a declaration of insolvency and the consequent general concurso of creditors, governed by articles 955–965 of the new Civil Code and articles 748–790 of the Code of Civil Procedure. An insolvent debtor engaged in trade on a regular basis is subject to the process of bankruptcy, in accordance with the New Bankruptcy Law.
B. DECLARATION OF INSOLVENCY AND CONCURSO OF CREDITORS
11.102 A declaration of insolvency may be applied for by the debtor himself, by the administrator of his estate or, by any ordinary creditor, and gives rise to the immediate maturing of his debts, the collection of all his non-exempt properties, including those which he may acquire during the course of the proceedings, and execution by means of the general concurso of his creditors.
11.103 The debtor is required to submit a defense within ten days, but may, within that period, contest the application for insolvency by depositing the amount of the claim and raising the issue of its merits or amount. If the debtor applies for the declaration of insolvency, the application must contain a list of the names of all his creditors, together with their addresses, the nature and the amount of the claim of each one, a list of all his assets together with their approximate value, and a report concerning his assets position with an explanation of the reasons for the insolvency.
11.104 All the creditors may schedule an appearance at the proceedings for declaration of the debtor’s insolvency, and any execution proceedings brought by individual creditors will be remitted to the court presiding over such proceedings. Upon formal declaration of insolvency, the court will appoint an administrator of the insolvent estate (massa) chosen from among the major creditors, and will order a notice to be issued inviting the creditors to file their claims within 20 days.
Pinheiro Neto - Advogados, established in 1942, is Brazil's leading commercial law firm with offices in Sao Paulo, Rio de Janeiro and Brasilia. The founding Editor of this publication, the late J.M. Pinheiro Neto, was the Legal Advisor to the British Chamber of Commerce in Brazil.