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Date: July 12, 2022
Posted by: CPDMA Team

The eviction action in the judicial recovery

Illustrative image of the CPDMA lawyer who works with eviction and judicial recovery action.

Companies that file a judicial recovery action and have their activities carried out in leased properties may, in the event of default, face an eviction action, even if the credit is listed in the creditors list. On this topic, there are some very important issues being dealt with in the courts regarding the suspension of the demand and about the resumption of the asset during the period of processing of the judicial reorganization.

First of all, it is important to point out that the eviction action may occur for different reasons according to the Tenancy Law (Law 8.245/191). The most common, in the case of companies undergoing judicial reorganization, is the request for eviction due to non-payment (art. 9, II). The action may also be based on mere breach of contract (art. 9, I), or be an action for empty denunciation when the term established in the contract has elapsed (art. 46, §2).

To the Law 11.101/2005, which regulates the judicial reorganization of companies, the cause of action in the eviction action is fundamental for the definition of the maintenance of possession of the debtor in the leased property, because the acts of constriction are suspended while the reorganization is being processed. Therefore, the first analysis to be made is whether the eviction request is based on the credit default that is subject to recovery.

There is no doubt that the credits constituted before the entry of the judicial reorganization are subject to the restructuring plan. However, when the repossession of the leased property is claimed in court, a discussion begins between the property right and the preservation of the company being recovered. The first seeking a constitutional bias defending property as an absolute right, the second defending the social interest generated by the maintenance of economic activity.

The current that defends the impossibility of eviction based on the default of subject credit uses the argument inscribed in art. 6 of Law 11.101/2005, which deals with suspensions of acts of constriction. They understand that, once the enforceability of the credit is suspended, the effects of the default cannot affect the lessee and, as eviction is one of these direct effects, it must be suspended until the plan is approved or rejected.

In addition, this thesis gains strength when compared to the other so-called proprietary creditors highlighted in art. 49, § 3 of the same law. These commonly called "proprietary creditors", which are, for example, those guaranteed fiduciary alienation of assets, are not subject to the effects of the reorganization, however they are prevented from withdrawing capital goods that are essential to the activity of the debtor. creditor who is also the owner of the asset and who is not even subject to judicial recovery cannot take back the asset, there is no reason to make an exception for the lessor whose credit is subject to recovery.

The path that defends the non-suspension of the eviction action is based on the right to property that is enshrined in the Federal Constitution, art. 5, XXII (“the right to property is guaranteed”), combined with the legislation of Law nº 8.245/91 (Lease of Tenancy). The argument there is that this good whose possession was delivered by temporary and onerous assignment of use, is not part of the company's property, so it would not be covered by art. 6, § 7-B, of Law 11,101/05, which refers to the jurisdiction of the judicial reorganization court to determine the suspension of acts of constriction that fall on capital assets essential to the maintenance of business activity. For this reason, since it is not an asset belonging to the assets of the company under recovery, the universal court would not be competent to decide on the destination of such asset.

There is, however, another procedural problem that is related to the definition of the competent court to suspend the eviction action. In the Superior Court of Justice, the understanding prevails that "The eviction action filed by the landlord against a business company undergoing judicial reorganization is not subject to the jurisdiction of the reorganization court" (CC 148.803/RJ, Chief Justice NANCY ANDRIGHI, SECOND SECTION , judged on 04/26/2017, DJe 05/02/2017).

This position is in line with other judgments of the Second Section, such as CC 123.116/SP, DJe 11/03/2014, and AgRg in CC 145.517/RS, DJe 06/29/2016, which understand that “In eviction action moved by the lessor owner, the resumption of direct possession of the leased property to the business company undergoing judicial reorganization, based on the provisions of the specific law (the Tenancy Law No. (CC 123.116/SP).

There is, however, in the jurisprudence, a divergent position - even if still a minority. The 2nd Chamber of Business Law of the São Paulo Court of Justice has already ruled that "although the reorganization court does not have the competence to preside over the eviction action, it is up to it to define the destination of the essential assets for the achievement of the business activity debtors, as guardian of the principle of preservation of the company enshrined in article 47 of the governing law" and that the "repossession of the essential property violates the provisions of the final part of § 3 of article 49 of the LRF", and the property right (AI No. 2250318-08.2019.8.26.0000, Rapporteur Araldo Telles, 2nd Reserved Chamber of Business Law, j. 04/15/2020).

Although Law 14.112/2020 has made judicial cooperation measures positive among judges, there is a certain resistance from the civil courts that process the evictions to suspend the repossession of the properties, even after the judges provide information about the judicial recovery and the effects of subjection of credit.

Among many other situations, one can still highlight the resolutive clauses expressed by insolvency (ipso facto clause) where the exception of the interests of the parties (pacta sunt servenda) can be observed in view of the importance of the asset to the company under reorganization and its creditors, listening to the judgment of recovery. The same can be used in cases of an arbitration clause, where the choice by the arbitration court may generate an impasse before the eviction injunction and the subjection of the credit to recovery. In this case, the merits submitted to the arbitration court cannot be the object of deliberation in the Judiciary, however, until the deliberations of the arbitrators are installed, there is, in our view, even in summary cognition, the possibility of protecting the rights of the lessee/ being recovered to stay in the property.

On the other hand, the default subsequent to the filing of the reorganization may lead to the eviction of the debtor, because it is not possible to transmit to the owner the “financing” of the recovery of the debtor. It is the duty of the debtor to comply with its current obligations as a way of demonstrating its economic viability.

It is necessary to look for alternatives so that the retail chains, the ones most affected by the issue, can have the same possibilities of economic and financial reorganization as the other segments of the economy. For this to happen, judicial cooperation must be effective, guaranteeing to the owner the receipt of overdue rents (within the judicial recovery plan) and those due (as current debt in the course of the process). It is necessary for the debtor to guarantee the maintenance of its activities so that it can have a minimum of predictability in its cash projection and thus honor its restructuring plan.

By Thiago Castro da Silva
CPDMA Team - Business Restructuring

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