Government measures in key jurisdictions 4th edition - Flipbook - Page 16
Brazil
Contributor: MattosFilho
Loans and
financial
support
Has the
government put in
place any new
bank funding
schemes?
Employment
What financial
support is
the government
providing to
businesses and to
individuals on
employment
issues?
Alessandro Amadeu da Fonseca| afonseca@mattosfilho.com.br | +55 11 3147 7826
Rodrigo Ferreira Figueiredo | rodrigof@mattosfilho.com.br | +44 207280 0161
Since the beginning of the outbreak, the government has been taking some important measures to
mitigate the effects of the current scenario. The federal government, through Brazilian governmentowned banks, has been providing funds to support mostly small and medium-sized companies with
respect to employees’ payroll and working capital during the period of crisis. The federal government
has also been encouraging the Brazilian government owned/development banks (such as BNDES,
BNB, CEF and Banco do Brasil) to postpone the payment of principal and interest of existing loans for
periods of up to six months. The financial conditions may vary from bank to bank.
Brazilian federal agencies have also issued temporary regulation suspending certain obligations in
order to foster loans and issuances in the financial and capital markets (e.g., suspending the
obligation of filing and registering certain corporate acts with the Boards of Trade, lifting restrictions
for companies to issue the same type of security within four months from its last issuance). The
federal government has also suspended the payment of certain taxes applicable to financial
transactions for a period of 90 days.
The federal government issued Provisional Measure No. 936, later turned into Law No. 14,020, which
provides an allowance called “emergency benefit” to employees who (i) had their employment
agreements suspended, and/or (ii) reduced to part-time with a corresponding salary decrease, by means
of collective or individual agreements, that must comply with certain requirements set forth therein. The
aid regarding suspensions and part-time reductions, initially to 60 and 90 days respectively, were
extended by Decrees 10,422 and 10,470 and are currently capped at 180 days. Moreover, Provisional
Measure No. 944 created the Emergency Employment Support Program, which established an
emergency line of credit for financing small businesses’ payrolls for two months, which was not
converted into law. Finally, Law No. 13,982 ensured a monthly allowance of BRL 600.00, popularly known
as “corona voucher”, to microentrepreneurs, autonomous, informal workers and the unemployed for
three months, which was extended by two more months by Decree 10,412. There is currently discussion
on whether this measure extended again.
In May 2020, the Brazilian “House of Representatives” (“Câmara dos Deputados”) approved Bill No.
1,397/2020 (“Bill”), which was intended to include in the insolvency legislation emergency relief
Has the government measures in response to the COVID-19 pandemic. There was fierce opposition to the proposed
made any changes legislation and it seems Congress has lost its interest in it.
to insolvency
As a result, on August 26, 2020, the House of Representatives approved a new version of Bill of Law
legislation?
6,229/2005 (“Bill of Law”), which amends significant provisions of the Brazilian Judicial Reorganization
and Bankruptcy Law currently in force (Law 11,101/2005) and Brazilian Federal Law 10,522/2002
(which provides for the Registry of Defaulted Credits – CADIN). The Bill is now under analysis by the
Senate and will subsequently require a Presidential signing statement.
Insolvency
In line with the original wording of Law 11,101/2005, the Bill maintains the preservation of the
company as its guiding principle, with particular emphasis on improving the judicial reorganization
and out-of-court reorganization mechanisms. The Bill of Law also expressly incorporates in the
legislation some court interpretations that were already adopted in insolvency proceedings, but, until
now, have only been only discussed in case law, due to lack of legal authority.
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Government measures in key jurisdictions