Debtor-financing in judicial recovery and covid-19 pandemia impacts on the brazilian entrepreneurs

Objectives: The instant work investigates the effects of the COVID-19 pandemia on Brazilians entrepreneur, through analysis of two premises: (i) in 2020, the number of judicial reorganization requests would increase exponentially;(ii) the legislative measures promulgated by law #14,112/2020 upon law #11,101/2005, especially, the financing to debtors under judicial reorganization, would be useful and effective to the utilization of judicial recovery as a means of maintaining and preserving the company. Methodology: The deductive method was adopted, as from document research, as well as from analysis of data collected by other official statistical surveys and economic measurements. Results: It is appropriate to state that the sanitary measures for pandemia containment have deeply affected Brazilian entrepreneurs. However, the number of judicial reorganization requests has not increased, as expected, and the changes implemented upon bankruptcy legislation, as to debtor financing, have not yet proven efficient to foster the use of judicial reorganization. Contributions: Despite legal incentives created on behalf of debtor financing under judicial reorganization, there still is a high reputational cost to the entrepreneur which avails itself of this tool, turning the credit granted to this grantee more financially burdensome, on account of regulatory motivations. Finally, it can be mentioned that a judicial recovery request implies, to the debtor, the taking up of several obligations representing a significant tranche of expenses to the entrepreneur in distress, thereby discouraging such requests. © 2021, Centro Universitario Curitiba - UNICURITIBA. All rights reserved.