According to Brazilian law, certain credits are not subject to judicial recovery, such as creditors who are fiduciary owners of movable or immovable property, lessors, among others.
However, there is an exception for the allocation of the debtor company’s assets, when dealing with assets that are essential to the company’s business activity, called “capital assets”.
The definition of a capital asset consists of a tangible asset (movable or immovable), used in the company’s production process, as long as it is neither perishable nor consumable.
In view of this, financial resources and credit rights may be freely expropriated by creditors at any time. According to the STJ, financial assets do not qualify as capital assets, since they are not essential to the development of economic activity.
Therefore, essential assets are limited to capital assets that are in the hands of the debtor and that are essential to the company’s production process. In other words, the result of a crop production does not constitute a capital asset and, therefore, its essentiality for rural business activity is not recognized.
What is observed is that recent decisions take into account the specific situation to verify whether a given capital asset is really essential or not to the business activity, by verifying the corporate purpose developed by the debtor.
Thus, the stance adopted by the higher courts has proven to be favorable to creditors, who will have an easier path to execute their credit that is not subject to Judicial Recovery.
