The current bankruptcy law (Law No. 11101/05) contains requirements for the bankrupt’s commercial rehabilitation that violate his fundamental rights to work and to free enterprise, which may be waived according to the peculiarities of the case. This was the understanding of Judge Daniel Carnio Costa, of the 1st Court of Bankruptcy and Judicial Recovery of São Paulo, when he decided for the rehabilitation of the managing partner of a company whose bankruptcy had been decreed.
According to art. 102 of the Bankruptcy Law, the bankrupt is disqualified from exercising any business activity until the judgment that extinguishes his obligations, while art. 158 determines that this extinguishment occurs after payment of at least half of the unsecured claims or after five years as from the termination of the bankruptcy. However, when analyzing a case in which payment of the established minimum would be impossible, the magistrate decided that linking the counting of the rehabilitation period to the closure of the bankruptcy proceedings would result in the bankrupt’s impediment for an indefinite period of time, making it impossible for him to exercise his fundamental rights.
According to the decision, as the law provides that the statute of limitations for bankruptcy crimes begins with the bankruptcy decree, this rationale should be approximated for the case of rehabilitation so that a civil punishment is not imposed for a longer time than the criminal punishment. Thus, he considered it reasonable to admit that the beginning of the time limit for rehabilitation of the bankrupt may be the date of the court decision that determined the closing of the investigation into the practice of bankruptcy crime.
With respect to article 191 of the CTN, which determines that “the extinguishment of the bankrupt’s obligations requires proof that all taxes have been paid,” the decision recognized that the best reading of the expression “bankrupt” should be restricted to the bankrupt company in question and not extended to its managing partner. Otherwise, it would be absolutely impossible to pay the debts and return to business activities.
In the end, the decision praises the so-called fresh start present in common law systems, which allows the return to business activities of that honest debtor, but unfortunate in the conduct of his business.
Bankruptcy Action No. 0042511-48.2016.8.26.0100