At the beginning of October, the 3rd Panel of the STJ, by a majority of votes, decided on four special appeals (REsp 2.026.250, REsp 2.036.410, REsp 2.038.048 and REsp 2.155.284) taking the position that non-profit foundations are not entitled to file for Judicial Recovery. The decision, unprecedented until then, seems, at first glance, to resolve a latent controversy in the country’s main courts. However, the problems continue without adequate solutions for the recovery of relevant agents that do not fall under the corporate type of company, such as educational institutions and hospital associations.
The decision, drafted by Justice Ricardo Villas Bôas Cueva, mentions that, in return for the benefits brought by business activity, judicial reorganization would be a form of sacrifice by society, especially employees and suppliers, towards the entrepreneur or company, with the aim of maintaining jobs and generating wealth. However, he points out that this logic could not be applied to associations and foundations because, as they provide services of public utility, society’s counterpart would be the granting of tax benefits through the state.
He also talks about the legal uncertainty of creditors who contract with these associations and foundations, who, at the time of entering into the contract, do not take into account the possibility of these entities applying for judicial reorganization. He concludes by saying that art. 1 of Law 11.101/05 is clear in providing that only entrepreneurs and business companies can request to overcome the state of crisis through the institute of judicial recovery and that not including this issue in the 2020 legislative amendment would already be a decision.
Right. Although the decision can be used as a precedent for other cases dealing with the matter, it should not be forgotten that, even in summary cognition, in 2022, the 4th Panel of the STJ decided, by majority vote, to authorize the continuation of the judicial reorganization of the Methodist Institute of Education – IMED (TP No. 3654 / RS), with the Special Appeal still pending a decision.
On that occasion, Justice Luis Felipe Salomão delivered a lengthy opinion highlighting that, despite the fact that associations do not distribute profits, many end up structuring themselves as real companies from an economic point of view, carrying out organized economic activity for the production and circulation of goods and services, striving to maintain activities of extreme economic and social relevance, carrying out activities related to social and fundamental rights, such as education and health, of which the state is often silent.
In addition to the aforementioned decision, the legislator took it upon itself to legitimize soccer clubs, even if they are constituted in the form of a civil association, to file for judicial recovery, through Law 14.193/21[1]called the Football Companies Act. In other words, it is possible for associations to file for judicial reorganization, as long as they carry out soccer activities. On the other hand, if they are educational institutions or hospital associations, they do not have the same legal standing due to the lack of legal provisions.
In the same vein, among the changes made by Law 14.112 of 2020, the final part of paragraph 13 of article 6 was included. This modification authorizes medical cooperatives that operate health plans to benefit from the judicial recovery regime, equating them to companies. The issue was recently analyzed by the Federal Supreme Court (STF), through Direct Action of Unconstitutionality (ADI) 7442, in which the constitutionality of this change was recognized.
Thus, to say that the recent STJ decision would have put an end to the controversy over the legitimacy of associations and foundations to file for judicial reorganization would be foolhardy for a number of reasons: (i) the existence of opposing views among the Justices themselves; (ii) the existence of legislation legitimizing entities constituted in the same format; and (iii) the existence of numerous Special Appeals on the matter pending judgment, among which are important philanthropic hospitals and educational institutions, such as Santa Casa do Rio Grande, Irmandade Santa Casa de Misericórdia de Fernandópolis, Maternidade de Campinas, Instituto Metodista de Educação – IMED, among others.
What is undeniable, whatever the position, is that these agents have great social and economic relevance, create jobs, income and contribute to the country’s growth and social development and, just like entrepreneurs and companies, are subject to constant economic and financial instability generated by the management of their activity or by the market itself. And what are these agents’ alternatives for resolving a possible crisis situation?
Articles 1.102 to 1.112 of the Civil Code provide for the hypothesis of liquidation, which means putting an end to the activity. In other words, in the law, there is no possibility of overcoming the crisis on the part of these agents, the solution is to close down the activities, which in many cases means closing the doors of philanthropic hospitals that serve thousands of people and dozens of municipalities.
The other strategy found by some institutions, such as Ulbra and the São Judas Tadeu Educational Institution, was to transform civil associations into business companies. However, this doesn’t seem to be an option for all cases, given the need to find potential investors, as well as the fact that it involves the privatization of institutions that receive public funding, such as hospitals.
Finally, following the example of the SAF Law, developed especially for soccer clubs, the alternative that would really put an end to the controversy and provide legal certainty for all those involved in the operations would be the enactment of a law that contemplates these entities and regulates the possibility of them making use of judicial recovery, with conditions and requirements that suit the market and the organizational structures of the institutions, in order to make it possible to overcome the crisis of important economic agents.
[1] art. 13 with arts. 25 and 1º, §1º, I, of the aforementioned Law.