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Company Liquidation in Brazil

Company Liquidation in Brazil

Company liquidation in Brazil covers proceedings of non-corporate and corporate entities. The first ones are governed by the Civil Code, while the second ones by Law 11,101/2005. The first step in any of the two cases is filing for insolvency, followed by bankruptcy.

Below, our lawyers in Brazil explain how you can close a business in this country. We are at your disposal with several services related to company winding up in Brazil.

Conditions for a Brazilian company to be declared bankrupt

A company must meet a set of criteria before being allowed to enter into liquidation in Brazil. The most important one is for it to be declared a business, from a legal point of view. This condition also applies to sole traders, for example.

From there, company winding up can be divided into:

  1. a voluntary procedure (decided by the shareholders);
  2. a compulsory procedure (decided by a Brazilian court of law).

Closing a company voluntarily in Brazil requires the owners to start the dissolution of the business and appoint a liquidator.

Mandatory winding up occurs when one or more creditors file a petition in court and ask for the company’s activity to cease. Based on reasonable cause, the judge may rule for the liquidation as part of the debt collection procedure.

Each of the two situations can be explained by our Brazilian lawyers who can also help you carry out any procedure.

Voluntary company winding up in Brazil

This is one of the simplest ways to close down a business. It can occur when:

  1. the company was incorporated for a limited period from the beginning;
  2. one or more shareholders have left the business, leaving it in the position of not respecting the law or its own bylaws;
  3. the shareholders have reached a mutual agreement to terminate the business.

In this case, the shareholders must convene a meeting and draft the decision to liquidate the company. The declaration must be filed along with other documents with the Trade Register. It must also appoint a liquidator (usually one of the directors is nominated).

Feel free to address our law firm in Brazil for support if you decide to close your company and need assistance.

Compulsory company liquidation in Brazil

Closing a company in Brazil can also occur after a court of law has issued a ruling. In this case, the decision is made by a judge, who will appoint the liquidator. Similar documents as in the case of voluntary liquidation must be filed with the Companies House.

Apart from these, the liquidator will be in charge of making the inventory with all the assets that can be used in the debt repayment stage. All remaining goods will be distributed among the shareholders, in accordance with their participation in the business.

Number of companies filing for bankruptcy protection on the rise

According to a recent survey, the number of companies requesting bankruptcy protection in 2023 was higher compared to 2022. In numbers, things look as follows:

  • in the first quarter of 2023 (Q1), 289 companies filed for protection against bankruptcy;
  • out of all types of businesses, micro firms and small businesses accounted for 20%;
  • 6.5 million companies could not pay their debts or apply for business loans, out of which 90% were small and medium-sized enterprises (SMEs).

Apart from our support dedicated to businesses, our lawyers have also developed various legal services available to natural persons. Among these, one of the most sought is related to immigration to Brazil. From this point of view, we can help you obtain residency and citizenship in Brazil.

Do not hesitate to contact our law office for support in company liquidation in Brazil or any other service we can assist with.