Dispute Resolution | Targeting Execution Against Debtor’s Company Can Be a Strategy in Credit Recovery in Brazil

In enforcement proceedings, when there is a misuse of purpose and concealment of assets by the company, creditors may request the so-called disregard of the company’s legal personality, with the aim of affecting the partners’ personal assets.

On the other hand, given the same requirements, the opposite is also legally possible: when property fraud committed by debtors who are partners in companies is verified, the law authorizes the redirection of the execution against the company of which the partner is a part – in order to hold the company responsible legal entity for debts incurred by its partners.

As the procedure allows for the presentation of a defense and production of evidence, it is possible to request measures such as the preliminary seizure of the company’s assets, to guarantee future credit recovery.

This thesis can be applied when the main debtor transfers assets to the company to avoid paying their debts and is therefore also an effective measure in credit recovery, whether by seizing company assets or opening a channel for negotiation with the debtor.

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