In an important decision for agribusiness lenders, the Brazilian Superior Court of Justice (STJ) established that products cultivated by farmers undergoing judicial recovery do not fall under the concept of “essential goods,” meaning they can be seized by creditors even during the stay period (the period in which executions are suspended against companies/farmers in judicial recovery).
In this case, farmers in judicial recovery had defaulted on soybean purchase and sale contracts and requested, during the proceedings, that the essential nature of the soy and corn grains produced and in production be recognized, as well as authorization to continue harvesting for the commercialization of these products.
The farmers’ requests were initially accepted, recognizing the essentiality of the commodities for the reorganization proceeding, and consequently, the impossibility of seizure and expropriation by creditors outside the judicial recovery process.
Regarding the ruling of the STJ, it is worth highlighting two conclusions:
1.The grains cultivated and sold by the debtors do not constitute essential goods, as they are not used in the production process, and are merely the final product of the business activity carried out by them;
2.There is no legal impediment to such agricultural products being sold or removed from the producers’ establishment to pay individual creditors outside the recovery process.
With this precedent, creditors of agribusiness companies in judicial recovery now have another option for satisfying their claims, provided they have active legal executions against the companies in recovery.
