On Dec. 24, 2020, the president of Brazil signed Law 14.112, which enacts a number of significant reforms to Brazil’s bankruptcy laws that had been debated within the Brazilian government for several years. Collectively, these reforms represent an attempt to expand and clarify creditors’ rights and modernize Brazil’s bankruptcy framework (the Brazilian Bankruptcy Law). Law 14.112 incorporates court-approved debtor-in-possession financing, recognition of foreign proceedings, and other concepts that are essential parts of the U.S. Bankruptcy Code and the bankruptcy laws of countless other countries. (The reforms discussed in this article apply in pending reorganization cases, except for the ability to file creditor-proposed plans, which will only apply prospectively.)

As we have done in our prior articles on Brazilian bankruptcy issues, we discussed Law 14.112 with Marcos Leite de Castro and Antonio Affonso Mac Dowell Leite de Castro, partners at the law firm of Mac Dowell, Melo & Leite De Castro Advogados in Rio de Janeiro. Their guidance on Law 14.112’s changes to corporate restructurings is summarized below.