There was no time to even feel relief with the Court’s decision to accept the request and the São Paulo Jockey Club was already surprised by the suspension of the measure a week later, on October 9th, by the São Paulo Court of Justice. The TJ-SP’s argument is that non-profit civil associations, like the entity, do not have an express legal provision to enter the recovery regime.
The approval had been made at the end of September with recognition of a debt of at least R$38 million (despite only having listed R$19 million in the initial petition), in addition to liabilities of R$634 million not submitted to the process, according to a report by the judicial administrator, AJ Ruiz, cited by the newspaper Economic Value.
In the decision, however, judge Carlos Alberto de Salles maintained the temporary suspension of actions and executions carried out against the company, the so-called stay period“as a precautionary measure.”
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Lawyer Denny Militello explains that there is no legislative authorization for non-profit civil associations to make use of the judicial recovery institute. “The initial decision was based more on historical and social aspects of the Jockey Club than on legal rigor, without delving into the requirements of the law, therefore risking creating a distortion in the use of the judicial recovery institute,” he said.
According to lawyer Cláudio Miranda, partner at Chalfin Goldberg Vainboim Advogados, only business owners and companies can request judicial recovery. “Some judges even allow the process in an extraordinary way, to preserve a productive source, but such flexibility goes against the letter of the law,” he said.
Bruno Boris, lawyer and founding partner of Bruno Boris Advogados, adds that, although the law does not expressly prohibit associations from entering into judicial recovery, the jurisprudence is not yet pacified. “There are precedents that accept requests from associations when they act as relevant economic agents”, he states.
In any case, the decision in the Jockey case is unique and provisional in nature, and may be subject to review by higher courts, since the issue of legitimacy is sensitive, but must be weighed against the principle of preserving the company, as explained by lawyer Eduardo Terashima, partner at NHM Advogados.
What the decision means
The suspension decided by the TJ-SP prevents the Jockey Club from advancing in recovery until its legitimacy to do so is resolved. But the temporary maintenance of benefits means that your debts and foreclosures are “on hold”, at least temporarily.
For creditors and other parties, the scenario brings uncertainty: obligations are frozen, but there is no guarantee that the recovery will be resumed or converted into a conventional process. The entity benefits from legal caution to avoid dissolution, but also faces the risk of insolvency if it cannot use the recovery mechanism, according to experts.
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Questioned by the report, the Jockey stated that he will not comment, for now, pending the progress of the process.
Long story
With more than 150 years of history, the São Paulo Jockey Club carries out relevant economic activities, such as renting spaces for events, medical and veterinary services, employing more than 180 employees. Therefore, the decision to suspend judicial recovery is not only based on formalities, but also on the balance between preserving economic activity and compliance with legal standards, experts say.
For the market, the case draws attention to two structural issues: the adequacy of the legal system to entities that, although associations, operate on a business scale. Legal security for creditors who contract with these entities, who now face suspended execution and uncertainty regarding the future of recovery.
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The suspension of the Judicial Recovery is another chapter in the long soap opera surrounding one of the most traditional event spaces in São Paulo, which even includes allegations of embezzlement of R$83.6 million in tax incentives from the federal and municipal governments over the last seven years that should have been used to restore the headquarters on the banks of the Pinheiros River, in the West Zone of the capital of São Paulo.
