The one presented by Vasco earlier this week was accepted by the Rio court on Wednesday (26). In a few days, a judicial administrator will be appointed to the club, who sees in the mechanism the possibility of renegotiating his debts, now estimated at $ 1.4 billion, with all his creditors. The process is being processed at the 4th Business Court of the Rio de Janeiro Court of Justice.
Vasco argues that judicial recovery “increases legal certainty, creating a scenario of predictability and financial stability, favorable to attract new investors.” Pedrinho, club president, and Carlos Amodeo, current CEO of Vasco Saf, say it will allow the club to restructure and become financially healthy.
Judicial recovery, in summary, saves bankruptcy companies. The mechanism was used by football clubs recently. Law No. 11,101 of 2005, known as Business Recovery and Bankruptcy Law, seeks to help not only the company, but also its customers, suppliers, workers and the state. This legislation aims to allow the debtor’s economic and financial crisis situation to overcome the situation of economic and financial crisis.
The law guarantees to those who ask for judicial recovery benefits such as suspension of ongoing shares, stretching of deadline for payment of debt and greater installment and the disagreement of debts.
“Judicial recovery is not a free pass for the forgiveness of debt, but an instrument that enables the renegotiation and restructuring of debts in an orderly and viable manner. The success of this procedure will depend on the efficient management of the club, the cooperation of creditors and the ability to implement a sustainable recovery plan, ”says Leonardo Zenkoo, lawyer at CCLA Advogados.
The case occurs in a time of financial crisis aggravated by the lack of contributions from 777 partners and the costs of the centralized execution regime.
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Next Steps
With the request accepted, there is a period of six months for Vasco’s payment obligations to be suspended. In the meantime, a judge appoints a judicial administrator, responsible for formulating the list with club creditors and sending them a letter.
After 60 days since the beginning of the process, Vasco must present a feasible plan to negotiate their debts and recover their financial health. Commonly submitted proposals include reduction or installment of the due values and division of the company, for example.
Presented the judicial recovery plan, the judge will call the assembly in which the approval or rejection of the plan will be discussed, as explained by Marcelo Godke, partner of Godke Advogados and specialist in corporate law. Creditors may propose changes to the proposal or even suggest a new plan.
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If there is approval by all four lendership classes, the club’s old debts are replaced by the new agreed conditions. “If the plan is approved, the recovery process should stay alive for two years and then it ends. That plan, which was a non -permanent change in debt, consolidates and debt innovates, becomes permanent and the process is extinguished, ”says Godke.
The process is supported by Alvarez & Marsal, the same consulting firm hired by Cruzeiro and Coritiba, which were successful with this mechanism in the past. The difference is that Vasco included in the judicial recovery, in addition to the non -profit civil association, its SAF, since most of the association’s debts was transferred to the company created in the sale of football to 777 Partners in 2022.
While in other cases the judicial recoveralation was limited to the SAF business entity, in the case of Vasco there is the claim for liabilities of the associative club and SAF to be dealt with jointly, as if they were a single debtor entity, as Rafael Coelho, partner of the insolvency area and judicial, extrajudicial and bankruptcy, from Paschoni Advogados office.
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“With the measure, creditors of the different classes will have their credits organized together, and a single plan of judicial recovery will be presented and voted at the General Assembly of creditors, covering the two entities,” says Coelho.
Bankruptcy can be requested by creditors when the debtor cannot comply with the proposed recovery plan. In this case, SAF has its goods auctioned and its activities are closed, something that has never occurred with a soccer club in Brazil.
