In an article published on the G1 news website, our lawyer specializing in Judicial Recovery, Dr. Camila Crespi, comments on the travel agency 123 Milhas, which filed for judicial recovery last Tuesday (29).

Travel agency filed for bankruptcy protection this Tuesday (29), stating that the measure is essential for it to be able to honor commitments with customers, former employees and suppliers.

The travel agency 123 Milhas filed for judicial recovery last Tuesday (29), at the 1st Business Court of the District of Belo Horizonte, in Minas Gerais.

The decision comes less than two weeks after the company suspended packages and ticket issuance for its promotional line (with flexible dates).

According to the company's lawyers, the request was filed due to “internal and external” factors, which “imposed a considerable increase in its liabilities in recent years”.

The measure, according to the company, aims to “ensure compliance with commitments made to customers, former employees and suppliers”, and should allow the company to reach solutions with creditors more quickly and be able to “rebalance its financial situation” (see 123 Milhas’ full statement at the end of this report).

What happens now?

According to experts interviewed by g1, once the request has been filed, there are two paths that can arise:
⦁ The deferral (acceptance) of the company’s request for judicial recovery; or
⦁ The appointment of an expert to make the preliminary assessment (see below).

If there is a need to appoint an expert for preliminary assessment:

According to BBMO Advogados partner Rodrigo de Oliveira Spinelli, the decision to appoint an expert may happen if the judge responsible for the case understands that the cause is “very complex”.

“If the judge appoints an expert, he or she will be responsible for analyzing the documentation and the reality of these companies that have entered into judicial recovery. This professional will assess the situation and give an opinion stating whether or not the companies meet the requirements for recovery,” explains the specialist.

If the request for judicial recovery is granted: If the request is accepted by the responsible judge, on the other hand, the procedures are different. According to the specialist in corporate restructuring and lawyer at Luchesi Advogados Camila Crespi, there will be:
⦁ Suspension of the statute of limitations on the debtor’s obligations;
⦁ The suspension of all actions and executions filed against 123 Milhas; and
⦁ The prohibition of any form of retention, arrest, seizure, search and seizure, or even judicial constraint against the company.

According to the lawyer, this prohibition occurs because judicial recovery provides the company with the opportunity to renegotiate its debts with its creditors, “in order to preserve business activity and social function (generation of jobs, circulation of goods and wealth, collection of taxes, etc.)”.

Spinelli, from BBMO Advogados, reiterates that the request filed by 123 Milhas still includes an injunction in which the company asks for the asset protection period, also known as the “stay period”, to be brought forward.

During this period, which can last from 180 to 360 days, all actions and executions against the company are suspended, protecting it from collection by creditors.

Finally, if 123 Milhas meets all the requirements for its request to be accepted by the responsible judge, the company will have approximately two months to present a judicial recovery plan, containing everything it intends to do to pay off its debts and get back on its feet.

How long does it take for the Judiciary to make a decision on the request for judicial recovery?

According to lawyers consulted by g1, the Bankruptcy and Judicial Reorganization Law does not stipulate a minimum or maximum term for the Judiciary.

“Usually, due to the urgency, this decision can be made in a matter of days or even a week. But it is all very relative,” says Spinelli.

According to Serur Advogados lawyer Tiago Cisneiros Barbosa de Araújo, this first decision, however, is just a “kind of authorization for the judicial recovery to continue”.

“At a second stage, when the company presents the recovery plan, creditors will be able to express their views on it, including at a general meeting, which may be in person or virtual,” says the lawyer.

He reiterates that the law requires certain quorums for approval by creditors and that, if this is met and there are no illegalities, the judge will issue a decision approving the plan, which grants the judicial recovery itself.

From that moment on, explains Araújo, the company will need to comply with what was established in the plan and previous debts are replaced by obligations that were agreed upon and accepted by creditors and the Judiciary.

“This second decision, granting judicial recovery, usually takes much longer, depending on the complexity of the process and the pace of the court where it is being processed. It can be issued in about six months, but sometimes it takes a few years,” adds Araújo.

Is the company at risk of bankruptcy?

According to experts, although it is still too early to make this analysis, since the process is still in its initial phase, the risk of bankruptcy exists.

“Once the company files for recovery and the requirements for judicial recovery to be converted into bankruptcy are met, there are risks, yes. However, due to the notoriety of the case and, mainly, the need for asset protection by the company, bankruptcy is not the most concrete hypothesis at this first stage”, says Crespi, from Luchesi Advogados.

Lawyers explain that bankruptcy may be declared, for example, if the company is rejected by creditors or if it fails to comply with what was agreed in the plan.

“This, however, varies greatly from case to case, including because there are points of flexibility in legislation and case law”, says Araújo, from Serur Advogados.

What happens to the employees recently laid off by 123 Milhas?

Recently, 123 Milhas employees reported to g1 that There were hundreds of layoffs in various sectors of the company.

In this scenario, the lawyers reiterate, the expectation is that employees dismissed up until the date of the request for judicial recovery will be included as labor creditors.

“[If employees still have amounts to receive from 123 Milhas] these credits will be subject to the effects of the judicial recovery and will be paid in accordance with the plan, if it is approved”, explains Araújo, highlighting that it is possible that these workers will receive their funds with a discount and in a longer period.

“On the other hand, the specific law ensures that labor creditors must settle their debts, as a rule, within one year from the decision granting judicial recovery. For other classes of creditors, there is no such time limit,” adds the lawyer.

What does 123 Miles say?

 In a statement, the company reported that it filed a request for judicial recovery with the Court of Justice of Minas Gerais, reiterating that the measure aims to “ensure compliance with commitments made to customers, former employees and suppliers”.

See the note in full:

 “123milhas informs that it filed today (29/08) with the Court of Justice of Minas Gerais a request for Judicial Recovery.

The measure aims to ensure compliance with commitments made to customers, former employees and suppliers. Judicial Recovery will allow all amounts owed to be concentrated in a single court. The company believes that, in this way, it will be able to reach solutions with all creditors more quickly in order to progressively rebalance its financial situation.

123milhas emphasizes that it continues to provide data, information and clarifications to the competent authorities whenever requested.

The company and its managers are available, in line with their commitments to transparency and ethics, to jointly develop measures that will enable them to pay their debts, restore their revenue and, thus, continue to contribute to the Brazilian tourism sector.”

Reproduction source: G1