Legal certainty for foreign loans to Brazilian farmers and investments in assets of companies under judicial reorganization was reinforced with the overthrow by Congress of presidential vetoes to the amended Brazilian Judicial Reorganization Law.
See below 2 of the main items favorable to foreign banks, funds, investors and commodity tradings that come into force:
1. Item Favorable for Lenders of Brazilian Agribusiness: it was established that, in the event of Judicial Reorganization (JR) of a individual farmer or commodity producer company, the credits and collateral linked to Rural Product Certificate (Cédula de Produto Rural or CPR) for the delivery of physical product will not be subject to JR, both in case of partial or full anticipation of the price, or, still, representative of exchange inputs (“barter”).
The creditor will also have the right to restitution of such goods that are in the possession of the CPR issuer or of any third party, except in the event of unforeseeable circumstances or force majeure that demonstrably prevents the partial or total fulfillment of the delivery of the product.
2. Item Favorable for Investors in Operating Units under JR: highly sensitive and relevant item for Brazilian and foreign investors, the Judicial Reorganization Law now states that, in the case of sale of operating units by companies under JR, the sale will be free of any burden.
There will be no succession or liability to the bidder/investor in the debtor’s obligations of any kind, including, but not limited to, those of an environmental, regulatory, administrative, criminal, anti-corruption, tax and labor nature.
Presidential vetoes overturned by Congress to reform the Judicial Reorganization Law also involve other issues, including taxation, which, together, improve the credit environment in Brazil and investment in the assets of companies in JR.