Business preservation and insolvency
Brazil prepared itself adequately, but not sufficiently, to face the adversities of global markets.
Intermittent signs of instability in the globalized economy are reflected in the numerous stimulus packages launched by foreign and local governments, aimed at saving thousands of jobs and an undetermined number of businesses.
Indeed, a true economic stimulus package followed the 2008 crisis; however, the more than 5 trillion dollars injected to rescue globalized economies proved insufficient to address the root causes of the debacle.
Brazil has prepared itself adequately, but not sufficiently, to face the adversities of global markets; however, the preservation of companies reveals worrying signs, given the growing number of insolvencies evidenced by statistical data.
It is true that jurisprudence has always prioritized the preservation of the company, in accordance with the guidelines of Law 11.101/05, so much so that the 4th Panel of the Superior Court of Justice (STJ), Rapporteur Minister Luiz Felipe Salomão, indicated that small and irrelevant amounts are not adequate for the recognition of bankruptcy, especially when the request was based on Decree-Law 7661/45.
There is an exhaustion of the Brazilian economic model, with the constant weakening of consumption and credit restrictions, resulting from public policies that have sectorized certain economic activities without addressing the overall context.
It is not without reason that expectations of an increase in the number of companies in recovery, and paradoxically, in bankruptcy, are emblematically showing a considerable rise, which could soon become a reality if corresponding measures are not taken.
The national industry is faltering, while, despite the rise in the US dollar, imports are increasing, and the closing of accounts becomes a matter of arithmetic, with a negative accounting result.
A minor reform of the Bankruptcy Law is urgently needed, ensuring coverage for all creditors, including the tax authorities, without the nonsense of installment payments, but with indiscriminate inclusion so that, according to revenue, the company in recovery can adjust its payroll to its level of indebtedness.
Primarily, micro and small businesses are showing signs of being suffocated, with gradual insolvency. Thus, under current legislation, it is impossible to reconcile recovery plans solely for unsecured creditors, and even more serious is the 12% annual interest rate, out of sync with the Selic rate, and the meager 3-year period for rescuing the business.
The time has come for the government to develop efficient measures, not just bland packages, and also, more directly, to awaken in parliament the vocation for reforming legislation.
The problem cannot be tackled by introducing debt recovery programs tied to individuals, whose over-indebtedness reflects a distorted and misguided credit policy, but rather through a system that can simultaneously foster business growth, providing stability and greater independence with regard to debt.
The future of Brazil's economy depends substantially on rational, transparent, and feasible measures; the economy cannot continue to stagnate, businesses cannot continue to hesitate, and consumption and exports cannot gradually decline.
Public authorities who intend to consider the future of the nation must now roll up their sleeves and, embracing the constitutional ideal of development and growth with social justice, abandon the campaign platforms to, in practice, set Brazil's stalled economic machinery in motion.
The worst thing is not losing the elections, but rather compromising the country's future, one's own tomorrow, by unleashing social chaos due to the mismanagement of the economy, whose reins are in the wind.
Carlos Henrique Abrão is a judge on the Court of Justice of São Paulo.