The Pre-Export Financing is an essential tool for fostering Brazilian exports.
Through this transaction, financial institutions advance, in local currency, the funds exporting companies need to structure the production phase of their goods, thereby reducing foreign exchange risk and improving cash flow.
With a view to encouraging the continuity of this financing, which is vital to foreign trade, the legislature granted preferential treatment to these claims. Under Article 49, paragraph 4, and Article 86, item II, of Brazilian Bankruptcy and Reorganization Act (No. 11.101/2005), amounts delivered to the debtor arising from an export foreign exchange advance contract are not subject to the effects of judicial reorganization (recuperação judicial). The case law of the Brazilian Superior Court of Justice has consolidated and elaborated upon the practical effects of this extra-bankruptcy-estate status.
Below are 3 significant impacts for financial institutions and creditors in Pre-Export Financing transactions:
1. Direct and Expedited Access via a Petition for Restitution: The Superior Court settled case law ensures that an Pre-Export Financing creditor need not undergo the lengthy claim-admission process within the general list of creditors. As reaffirmed in recent precedents of the Superior Court (such as Special Appeal (REsp) 2070288/PR), the appropriate procedural avenue is a petition for restitution filed directly with the court presiding over the judicial reorganization. This prerogative stems from the premise that the proceeds of the financed export belong to the financial institution and do not form part of the estate of the company undergoing reorganization.
2. Independence from the Reorganization Plan and Other Creditors: One of the most significant aspects of the Superior Court’s case law is its holding that an Pre-Export Financing creditor need not wait for payment of the other claims subject to the judicial reorganization. Unlike bankruptcy liquidation, which follows a strict order of payment, judicial reorganization presupposes that the company will be able to pay all creditors under the newly negotiated terms. Accordingly, there is no legal basis for deferring restitution of ACC amounts until after the judicial reorganization concludes, or for making such restitution contingent on the debtor’s performance of the plan vis-à-vis other creditors.
3. Evidentiary Requirements and Limits on Quantification: Notwithstanding the claim not being subject to the bankruptcy/reorganization procceeding, a creditor’s pursuit of these claims demands evidentiary diligence and precision in quantification. The Superior Court has indicated that a mere generic allegation is insufficient; the nature of the contract and the actual disbursement of the advance must be unequivocally proven, failing which the arrangement risks being characterized as an ordinary loan and thus subject to the reorganization proceeding. In addition, questions concerning the cumulation of amounts – such as monetary adjustment and foreign exchange variation – require technical care in drafting the petition for restitution, so as to avoid the exclusion of ancillary items (REsp 39422/SC).
The position established by the Superior Court affords financial institutions operating in foreign trade considerable legal certainty. By removing Pre-Export Financing claims from the effects of judicial reorganization and authorizing their immediate pursuit, the Court not only fulfills the legislative purpose of protecting exports, but also provides creditors with concrete mechanisms to expedite the recovery of their assets – provided that the evidentiary rigor inherent to this special class of claim is observed.
