Corporate default rises and increases the hunt for hidden assets
The increase in corporate defaults in Brazil is prompting a rise in the search for hidden assets to settle debts, as highlighted by experts involved in recent investigations.
In Brazil, the rising rate of corporate defaults and instances of judicial and extrajudicial recovery have led to an increased focus on discovering hidden assets that could be used to pay off these debts. This trend has garnered attention from specialists who have participated in investigations related to cases such as the Master Bank and Operation Car Wash, shedding light on the complexities involved in recovering owed money. According to these experts, the difficulty of tracking down such assets poses significant challenges, making debt recovery a prominent bottleneck within the judicial system.
There are now numerous public and private tools available that assist in identifying fraudulent activities and locating the wealth of shareholders or related companies that may be liable for debts. However, practitioners note that accessing this information can often be fraught with difficulty, contributing to delays in enforcing judicial rulings that mandate debt payment. Mariana Zonenschein, a lawyer specializing in corporate litigation, emphasizes that while judgments may be won, the actual collection of debts is often elusive, stating, "You win, but you don't take it. Only those who are clever manage to collect."
To effectively prioritize debt recovery, it often requires persistent pressure on the debtor. This 'pressure' may include identifying bank accounts and other relevant financial information. The commentary from Zonenschein reflects a broader concern within Brazil's legal community regarding the pressing need for reform in how debts are enforced and the methods prescribed for identifying hidden assets, signaling both a growing financial distress among companies and the need for more robust legal frameworks to address these challenges.