José Luiz Ragazzi and Lúcia Helena Polleti Bettini, partners of Tortoro, Madureira & Ragazzi Advogados

When dealing with the companies’ insolvency theme, we identity mandatorily the health companies fulfilling their obligations, which is translated in a health financial market and meet the economic Constitution, affirmed and legitimated by the attentive eyes to the economic and financial order, which are not limited only to the company’s maintenance and the freedom to establishing as someone going to explore the economic section as entrepreneur.  It is a much broader concept that affects other parties involved, albeit indirectly, it goes beyond the basic legal relationship for discussion of the subject, creditor and debtor, and goes to other constitutional sites, in addition to fair competition, social function and defense of private property, consumer and environmental protection, among others. 

The healthy market derives from the development of business activities, and immediately, it is guided and limited by numerous economic and financial principles and values very dear to our State, among them the valuation of work and the free initiative going together, always guided by the dictates of social justice and the dignity of the human person. Therefore, they are much more reason than the isolated fulfillment of obligations. This is about trust in the market, about security in legal relations on the basis of which equality is preserved in interrelations, which come from the 1988 social pact which must affirm and make respect possible for the other, with the recognition of alterity, because our existence does not happen in isolation, which, it also mediates social fundamental rights in their application and effectiveness, material core of the concreteness of human dignity and social justice. 

This is the theoretical framework proposed, both ethical and legal, to discuss the constitutionality of the abolition of guarantees in court-supervised reorganizations without the creditors’ consent, and such guarantees exist to maintain the balance between the parties and the state of solvency, which, as we understand, has far more extensive effects than simple bond relationship between creditor and debtor, it surpasses those involved originally and affects the market, the economic Constitution, the trust and security that it should determine, it supports free initiative and decent work and must be maintained even by state regulation and intervention. 

The possibility of seeking credit guarantees for the maintenance of the state of solvency is a very widely used instrument by several in the freedom of enterprise, also in the capacity of debtors when in difficulties, which allows these companies to maintain their commitments greater than the immediate ones as, this is about the fulfillment of a constitutional mission, of an action focused on what sustains the balance of the economic and financial order, which translates into trust, in the maintenance of the security of legal relations, and the actors of this action are protagonists of the fulfillment of the economic Constitution, and for its implementation and effectiveness, they depend on the fulfillment of obligations, both by creditors and debtors that sustain it. In this context, we emphasize the importance of the institutions responsible for the financing of various activities by means of credit, with the important role of maintaining or seeking a minimum of equality for fair competition to happen or to remain. 

Even with the possibility of financing, very common and recurrent in times of crisis, with the intention of reaching the balance level, the search for the court-supervised reorganization of companies has been repeatedly presented. The intervention of the State by the Judiciary is requested, which must show in an equation between law and economics that is fair and in accordance with the Constitution, the legality and equity are decision-making assumptions that are presented as reasons for such decisions. In other words, preservation of the rights of those involved and affected, both indirectly and immediately is sought in a fair and legal decision.  

At the moment, the discussion on the illegality and unconstitutionality of the removal of guarantees without the creditor’s consent is of great importance, as such a request is anchored and justified in the maintenance of companies in difficulties, in the state of insolvency and with a reorganization plan [Chapter 11 Plan], often attended in addition to the legislation provides that there is a need for creditor’s consent. In other words, alongside the illegality already recognized by the Superior Court of Justice in its votes on the subject matter, as the guarantee is removed without the creditor’s consent, in accordance with the rule expressed in the Law of Court-supervised Reorganization, the constant requests of companies that has not achieved the continuity of their business, which is often evidenced in a reorganization plan that does not show in detail the possible reach of the balance for its continuity, and the lack of creditor’s consent and legality.  

The impossibility of maintaining many of these companies and the absence of ratification by creditors of such suppressions in guarantees is quite the opposite of what justifies them, as, subsequently, we have observed many times,  the interruption of activities by the breakdown of these companies and numerous other default obligations, with very significant and extended effects, as we have already explained, among them, for example, the imbalance of equality in the search for financial institutions that will not be able to practice the same rules for those who need them. 

It is worth emphasizing the suppression of guarantees in the situation described and discussed in this Article, and the illegality, brings an unconstitutionality, affecting the freedom to undertake individually and collectively, what justifies and confirms it. The search for funding involves much more players than those described in the original obligation, it goes beyond them and reaches the collective, as trust and security in the legal relationships are diminished and reaches other possible market members. 

Thus, it reaches the economic Constitution in what it is fundamental basis, in human dignity and social justice, alongside the reason for the existence of the creditworthiness guarantee that is the maintenance of the company and the state of solvency. The market is affected and with consequences for many other social players that no longer benefit from the effective fulfillment of obligations, in an attempt to request to the judiciary to maintain it, but without respect to the legal commandment and presentation of details that brings a minimum of security which will remain and sustain itself without negative effects to those involved, particularly creditors and collectivity. 

The recognition the company is an activity and not the subject who manages it or the legal entity, brings the response to these recurrent demands that are brought to the judiciary in order to achieve the maintenance of the company in disagreement with the express normative command of the Law of Court-supervised Reorganization, i.e., the removal of guarantees to creditors without their express consent in the attempt to make business viable. The functionality of the legal system is at stake and the effectiveness of individual and social rights that are shown to be flexible and, worse, contrary to the Constitution.  

We therefore believe the legal standards must be construed according to the Constitution and the best interpretation is the one which privileges the text of the law widely discussed to be constitutional not only formally but materially, that is, the removal of guarantees without the creditor’s consent is hardly in line with constitutional unity and supremacy, as the principles of economic and financial order are expressed limits and are added to the effectiveness of the fundamental rights that remain adversely affected, in other words, it is affected in its effectiveness and consequent human dignity and social justice, contrary to the material aspect of its constitutionality  

The quest for trust, security and balance in the responses involving the State, Law and Economy, are diminished,  therefore we must question the constitutionality of decisions involving the abolition of guarantees in disregard of the express provision of law that affirms the need for creditor’s consent, as the economic, political, social and cultural processes are complementary and inseparable, and they must reflect on the affirmation of the will of Constitution, in this study, to the limits expressed that are also founding of the Brazilian State, social values of labor, dignified existence and social justice.