The Brazilian Superior Court of Justice (STJ), in Special Appeal No. 2,279,109/SP, ruled that a property’s essential nature does not prevent a fiduciary secured creditor from exercising its rights once the stay period expires. The decision, issued on September 30, 2026, reinforces the limits of asset protection in judicial reorganization proceedings and strengthens the legal certainty of fiduciary security arrangements.
We highlight 4 key implications for creditors:
1. Protection of essential assets is time-limited: Restrictions on the repossession of essential capital assets apply only during the stay period, which lasts 180 days and may be exceptionally extended for an additional 180 days, subject to specific statutory exceptions.
2. Preservation of fiduciary secured creditors’ rights: Claims secured by a fiduciary transfer of ownership are generally excluded from the effects of judicial reorganization proceedings. Once the stay period expires, secured creditors may resume exercising their rights over the collateral.
3. Greater legal certainty in credit recovery: The STJ reaffirmed that the principle of preserving a financially distressed business does not justify indefinite restrictions on the enforcement of security interests, providing greater predictability for creditors.
4. Importance of monitoring statutory deadlines: Tracking the commencement, extensions, and expiration of the stay period is essential to developing effective credit recovery strategies and determining the appropriate time to enforce security rights.
The decision reinforces that business preservation must be balanced against creditors’ rights, without allowing judicial reorganization proceedings to become a mechanism for indefinite asset protection.
