When a company declares bankruptcy, its assets are liquidated and the proceeds are used to pay off creditors. But who gets paid first?
In Brazil, there is a priority order for these payments, defined by legislation, with special attention to tax credits.
Tax credits (the company’s tax debts) hold a high priority in this order. This means that, after credits derived from labor legislation, limited to 150 minimum wages per creditor, and those arising from work-related accidents, which are not subject to any limit, creditors with specific guarantees (such as mortgages) are next in line, followed by the taxes owed to the government.
The key point here is the position of tax credits, which occupy third place in the order of preference, right after labor credits and credits with real guarantees.
However, a relevant aspect to analyze is the issue of tax credits arising during the course of bankruptcy. These credits are referred to as extraconcursal, as provided in Article 84, Section VI, of Law 11.101/2005, which states:
“Art. 84. Extraconcursal credits shall be considered and paid in precedence over the credits mentioned in Art. 83 of this Law: VI – the taxes related to taxable events occurring after the bankruptcy declaration.”
Therefore, extraconcursal credits, by their nature, must be paid in advance, even before the distribution of the collected amounts among concursal creditors. Thus, taxes arising after the bankruptcy declaration take precedence over all other credits, including labor and real guarantee credits.
Imagine a bankrupt company still carrying out some activities and generating taxes. These taxes are paid first to ensure that the company does not incur further debt with the government.
This legal provision aims to ensure that the bankrupt estate can continue operating, albeit in a limited capacity, during the liquidation process, fulfilling its tax obligations and avoiding the accumulation of new tax debts that could compromise and aggravate the financial situation of the bankrupt estate.
Understanding the priority of tax credits in bankruptcy, especially extraconcursal credits, is crucial to ensure fairness in the liquidation process and the effectiveness of tax collection. This approach also highlights the need for responsible financial management by companies and legal advisory that complies with the legislation, emphasizing the importance of tax compliance.
Finally, understanding the dynamics of extraconcursal credits is essential, not only for lawyers and managers but for all those involved in the bankruptcy process. Strict adherence to these rules contributes to a fairer and more efficient liquidation, favoring economic recovery and the stability of the business environment in Brazil.