Raw materials from companies undergoing judicial recovery can be seized, says...

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It is possible to seize or sell raw materials from a company undergoing judicial recovery during the shielding period — a period of up to 180 days in which the company in crisis can suspend enforcement actions. This was understood by the 2nd Reserved Chamber of Business Law of the São Paulo Court of Justice when maintaining a decision that allowed the seizure of sugar cane from a bioenergy company.


The res judicata involves the third paragraph B2B Lead of article 49 of the Judicial Recovery Law. The provision states that credits secured by fiduciary alienation are not subject to judicial recovery. However, the same rule prevents the removal of these assets sold during the shielding period, as long as they are essential to business activity.

In the case analyzed, the bioenergy company had signed a fiduciary sale agreement with an investment fund providing sugar cane as collateral. During the shielding period, the execution took place and all material was ordered to be seized. Unsatisfied, the company appealed to the TJ-SP claiming that the measure would not be possible, regardless of the quality of the creditor, as the sugarcane would be essential for its activity.

According to the newspaper Valor Econômico , the discussion involves the current harvest, which begins to be harvested in June. The bioenergy company pledged around 520 thousand tons of cane and sugar as collateral for the loan with the American fund, which represents 13% of its total production. A debt of around R$15 million.



For the 2nd Chamber of Business Law of the TJ-SP, however, seizure is possible because sugar cane cannot be considered a capital asset. Therefore, it would not be covered by article 49 of the Judicial Recovery Law. "Considering, in short, that there are, in this hypothesis, no capital assets to authorize the suspension of execution, I propose the dismissal of the appeal", stated the rapporteur, judge José Araldo da Costa Telles.