With the value of shares at more attractive prices, the purchase of assets from companies undergoing Judicial Reorganization is seen as an excellent business opportunity by investors who wish to expand their profit possibilities.
Despite this, acquiring companies in these situations also involves risks that must be calculated before negotiations for the transaction are opened. But what are these risks? In the end, is it really worth it?
Why does a company enter into Judicial Recovery?
Factors such as the economic crises that the country and the world are facing, combined with management difficulties, are some of the main factors responsible for causing many organizations to enter into judicial recovery, as a resource to avoid consolidating a bankruptcy process.
In Brazil, there is a significant number of companies that find themselves in this situation and data from Serasa Experian indicate that these rates have grown even more in 2023 – more precisely, a percentage of 52% in relation to 2022, totaling 593 companies, that’s just in the first semester.
Some cases became quite widespread and caught the attention of the general public due to the size of the corporations that used this procedure to safeguard their operations – Americanas, 123milhas and Oi are some of them.
In general terms, Judicial Recovery allows the debts that the company has accumulated to be suspended and for new negotiations to be carried out to resolve them. The main objective is to draw up a recovery plan for possible execution that demonstrates that the organization has the means to restructure itself based on the renegotiation of its liabilities.
It is important to remember that not all corporate types can use this procedure and requests for recovery must be made in court, by a lawyer representing companies that meet the required criteria.
What are the positive points of acquiring a company in Judicial Recovery?
Buying shares in companies that are going through a Judicial Recovery process can represent an interesting opportunity for potential investors and managers who wish to expand their market shares.
One of the most advantageous factors refers to the price of assets, which tends to be well below their real value. Another positive difference lies in the fact that most of these companies already have a consolidated market share, acquired customers and a defined operational flow.
From a legal point of view, it is essential to highlight that the liabilities of the company that tries to recover legally are not inherited by whoever acquires it. Article 60 of the Business Recovery and Bankruptcy Law is strict: the debtor’s obligations are not fulfilled by the successful bidder.
There are also government incentives with the aim of revitalizing the productive assets of these organizations, an example is the financing line created by BNDES so that they can be purchased more easily and continue generating resources.
What are the risks?
Even with numerous reasons that weigh positively on the decision to buy a company that is in the process of Judicial Recovery, risks exist and need to be analyzed carefully.
And the questions must begin with the most elementary: what were the reasons that led the company to resort to legal means to avoid bankruptcy? Is this, in fact, a business with guaranteed profitability? Did the previous administration leave structural and administrative problems difficult to resolve?
As we are dealing with companies in a pre-bankruptcy situation, the analysis of the existing financial situation must receive special care, so that what is cheap does not turn out to be expensive and the acquirer does not encounter greater difficulties ahead.
The very course of the Judicial Recovery may compromise the future developments of the corporation, after all, the possibility that it will not be successful exists.
To be sure whether the acquisition opportunity is a good one or not, having specialized advice will make all the difference, especially in the due diligence stage, which will be crucial to evaluate all the issues inherent to the current operation of the organization. 3capital is always ready to provide this assistance.
