HNAVES Advogados

Escritório de Advocacia e Boutique

Interview: How the the legal instability about collaterals make the credit in Brazil more expensive

Our partner Helen Naves analyzed for the JOTA portal how some court decisions on real estate given as collateral in judicial recovery processes have caused difficulties that go against the law that regulates corporate law.

The portal sought experts to analyze how legal uncertainty about guarantees has faced the taking of credit in Brazil.

What has occurred in practice, reports show, is that the judges disregard the real estate given as collateral on the grounds that they are essential for the company to remain active or that the disposal of the property results in the bankruptcy of the company.

Naves stressed that it is common for judges to make it difficult to take properties already given as collateral in judicial recovery proceedings and warned that these decisions hurt the execution of guarantees and the legislation to feed.

“It’s a bad situation, because in practice the judge ends up disregarding what is in the law, practically ignoring the guarantee, for the benefit of a debtor,” says the lawyer.

According to the law, if the debtor goes into judicial recovery, the bank could execute the contract and sell the property given as collateral.

The lawyer highlighted a crucial point in these proceedings: “Assets given as collateral should not go into judicial recovery, because the debtor does not have full ownership of them. Whoever owns the property is the creditor, as long as the debt is in effect.”

To read the full story, go to: https://lnkd.in/dQbNfDFr