Is filing for judicial reorganization the same as bankruptcy? Understand!

Talking about request for judicial reorganization It has become very common, especially after the pandemic, when many companies saw their numbers plummet.

What is a request for judicial reorganization?

If you've been following the media in recent years, you've probably seen frequent reports about bankruptcy filings.

One case that received significant media attention was that of the famous Americanas retail chain, which in 2023 filed for bankruptcy protection in Brazilian courts, claiming to have a debt of R$43 billion to approximately 16,000 investors.

When the news broke, many questions arose, especially from the network's employees, who were concerned about their jobs.

But what exactly is it?

A request for judicial reorganization is simply a legal procedure in which a company requests a period for financial recovery in an attempt to avoid bankruptcy.

The idea is for the company to use this period to try to negotiate with creditors, so that it can rebalance the business's accounts and recover.

Generally, when a company files this type of request, it is because it has identified a significant shortfall in its finances, responsible for serious losses and a high risk of business failure.

Is filing for judicial reorganization the same as bankruptcy?

By now you should have a good understanding of what a request for judicial reorganization is, and what the purpose of this procedure is.

But remember we talked about how many employees worry about their jobs when the company opens this request?

This is mainly due to the fact that many believe that filing for judicial reorganization and bankruptcy are practically the same thing.

However, as we have seen, in practice the request for judicial reorganization serves precisely to avoid bankruptcy.

So, no, a company that files this request is not declaring bankruptcy, although there is a risk of this happening if the recovery attempt fails.

It is a fact that cost-cutting is common in the recovery process; after all, resolving financial issues requires reducing expenses.

So, a large portion of the employees end up going through the layoff process, and for them, the outcome of recovery or bankruptcy is the same.

In any case, what you should know, if you are an employee, is that simply filing for bankruptcy protection does not mean the company will close or that you will lose your job.

You might be interested in this: Does your salary come with your severance pay? Understand and know how to proceed! (oadministrador.com).

The company I work for has filed for bankruptcy protection: what now?

While filing for bankruptcy protection is worrying for a company, this new development can generate doubts and anxiety for its employees.

That's because knowing that the company you work for is facing serious financial problems creates a feeling of being on a "tightrope."

If you are going through this right now, the first thing you should do is stay calm, because as we said before, this request is not synonymous with bankruptcy.

So, if the procedure yields results and the company manages to recover, the situation is resolved.

However, we cannot deny that in many cases, staff cuts are the first step in recovery, as they contribute to reducing expenses.

So, the possibility of going through a dismissal process is not remote. But don't worry, because if that happens, you will leave with all your labor rights guaranteed.

This is because, in this case, the dismissal occurs without just cause on the part of the employer; therefore, you are entitled to the 13th-month salary, FGTS fine, and unemployment insurance, if you meet the requirements.

And, considering that the purpose of filing for bankruptcy protection is precisely to avoid bigger problems, companies that request this procedure usually end up paying the severance packages.

In any case, stay calm and wait for the next steps, as it's likely you won't be harmed.

The company I work for is closing. What should I do now? (oadministrador.com)

The company declared bankruptcy and didn't pay my severance: what should I do?

In some cases, the request for judicial reorganization ends up not yielding results, or the company may not even request it before declaring bankruptcy.

The second situation, in particular, ends up being quite complicated, as there are many examples where the company declared bankruptcy and failed to pay severance to former employees. What does the law say about this?

There is no law that exempts a company from the obligation to pay severance pay to dismissed employees in the event of bankruptcy.

Therefore, when a company fires you and does not cover the severance costs, legal action should be taken to ensure it fulfills its responsibility.

Here are two key tips for dealing with this situation:

1. Check the deposits in your FGTS (Brazilian severance pay fund) and unemployment insurance accounts.

The first thing you should do after going through the dismissal process is to check your FGTS account and the possibility of receiving unemployment insurance.

This measure is important for two main reasons:

It is not uncommon for workers to discover after their contract is terminated that the company never made deposits into their FGTS (Brazilian severance pay fund) account, therefore they have nothing to withdraw. This practice is illegal.
By withdrawing at least your FGTS (Brazilian severance pay fund) and receiving unemployment insurance, you can support yourself for a while until the issue with your severance pay is resolved.

2. Seek professional guidance.

A good lawyer can help you resolve the issue of non-payment of severance pay through a labor lawsuit.

The purpose of this process is to expose the lack of payment (which in itself is illegal), and to legally demand compliance with the obligation.

Therefore, however long it takes, you will have the assurance that the justice system is aware of the non-compliance and will work to resolve the problem.

In any case, the important thing is to remain calm and seek appropriate guidance to resolve your problem and soon find a new job to overcome this difficult phase.

Roberta

I am a member of the O Administrador team and I produce content about career, personal finance, financial education, productivity, and professional development. My goal is to share clear and practical information to help readers with their day-to-day decisions.

June 17, 2024

Business