New judicial recovery law protects rural producers in financial difficulty

Brazilian rural producers who are in financial difficulty have, for the first time since the beginning of a grain harvest, a new resource to gain some cash flow. This year, Law 14.112/2020 came into force, which deals with judicial recovery and includes small, medium and large farmers. 

“The new law recognizes that the individual producer has the right to use the same legal mechanisms for his restructuring as any existing company in Brazil, as long as he proves his registration as a rural producer up to one day before the request for judicial recovery”, explains lawyer Jean Cioffi from JRCLaw, headquartered in São Paulo and with teams in Miami and Lisbon.

He notes that many farmers still do not know about the existence of this path to help them in times of circumstantial and surmountable financial difficulties.

Cioffi states that JRCLaw serves clients in several states such as Maranhão, Tocantins, and Santa Catarina, showing that problems are surmountable and can occur in different agricultural crops, such as corn, beans and soybeans, and for different reasons, such as crop failure, variation in the dollar, fires in the cultivation area as occurred in Paraná, drought or the pandemic.

“The worst scenario for producers, which I often see, is one in which they have already handed over part of their farms to creditors and are unable to pay off the debt. He reduced production capacity, job creation, revenue and taxes for the government, but he did not get out of the financial problem because he was misguided or did not have a specialist in the area of ​​contracts and debt renegotiation who could bring about a negotiated exit. , fast, effective and legally foreseen”, analyzes Cioffi.

In practice, when a specialized law firm is sought out by rural entrepreneurs in the initial stages of debt, the contracts are reviewed to identify situations to restore balance through extrajudicial dialogue, that is, mediation and conciliation.

However, in many cases, the producer is already in a situation of scarcity of resources, lack of credit for land preparation and planting, blocking of assets and seizure, and there is no other way than to resort to the Judiciary to preserve the assets. essential aspects of production and renegotiate with creditors in an organized and transparent manner.

In this scenario, we go to court with a request for judicial recovery, which was designed for that serious producer and businessman who wants to overcome the problem by renegotiating liabilities in order to pay all creditors, renewing their credit and their confidence in the market.

The action must be agile, the lawyer requests judicial protection from the producer to suspend for 180 days the actions against the assets, including the planting land, machinery and equipment, allowing a recovery plan to be presented in 60 days for negotiation with the creditors.

“Many rural producers refer to judicial recovery as being the old bankruptcy and, with that, comes the idea of ​​a bad payer, a deadbeat, and that is not true. The recovery exists so that the businessman can take a breather, reorganize debts, renegotiate them with creditors and pay them in order to continue producing and generating jobs and wealth”, highlights Cioffi.

Many large national and foreign companies have already gone through circumstantial problems, financially speaking, have resorted to the extra and/or judicial recovery process and today have attracted national and foreign investments, even having shares traded on the stock exchange, which indicates that it is undoubtedly a means for overcome the financial crisis and resume activities safely, renewing payment capacity, preserving family employment and reputation in the market.