A recent amendment to Brazil’s judicial reorganisation and bankruptcy law looks set to improve the prospects of foreign commodities financiers and insurers at a time when Covid-19 is driving up insolvencies around the world. Federal law number 14,112, which came into force on January 23, substantially overhauls Brazil’s insolvency legislation, giving foreign lenders greater certainty over how credits and collateral will be treated in the event of a principal or interest default by local borrowers, or in the event that a local borrower files for judicial reorganisation protection – a process largely analogous to a US Chapter 11 filing. To understand what this will mean in practice for commodities finance in Brazil, GTR speaks to Lúcio Feijó Lopes, managing partner and head of the trade finance team at law firm Feijó Lopes Advogados. GTR: What are the main points of note within the new legislation? Feijó Lopes: Brazilian soft and hard commodities producers and traders rely heavily on foreign structured trade finance lines to fund their exports. The availability of such hard currency funding lines depends greatly on the Brazilian overall risk, which includes not only the economic outlook of the country but also how credits and collateral held by… continue reading
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Source: CTRM Center