New Brazilian Federal Law 13986 introduces major legal innovations that benefit foreign lenders doing Trade Finance in Brazil. 5 key points:
1. Fiduciary Lien over Rural Land: The law allows rural land to be granted as collateral to foreign lenders, including Fiduciary Lien, a Judicial Recovery/Bankruptcy protected instrument.
2. CDA/WA: The law states that CDA/WA (Certificate of Agri-Livestock Deposit), once endorsed, is protected against Judicial Recovery and Bankruptcy.
3. Segregated Rural Asset (Patrimônio Rural em Afetação): A legal innovation, in which land owner may segregate rural land from overall property to form sort of trust not subject to owner’s geral obligations. It has to be associated with CPRs (Rural Product Notes) or CIRs (Rural Real Estate Notes) financing. Plantation, movable assets, and animals are excluded from it.
4. CPRs: Many improvements, including (i) broadened allowed issuers, (ii) financial CPRs to be issued with foreign currency adjustment, (iii) CPRs’ lenders may benefit from issuer’s segregated rural land, and (iv) CPRs to include fiduciary lien over fungible assets (ex. soybean, corn).
5. CRAs: The law now allows CRAs (Certificate of Agribusiness Receivables) to be issued with foreign currency adjustment.