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Brazilian bankruptcy glossary

A bankruptcy-estate auction notice uses the vocabulary of the bankruptcy case, which does not appear in an ordinary auction. The 25 terms below cover what the buyer finds in the notice, the seizure record and the trustee's report. Each term has its own link, for citing.

The terms below follow the order in which they appear in the case: from the declaration of bankruptcy to the realization of the assets. Click a term to copy its anchor link. The definitions cite the article of Lei 11.101/2005 where there is one.

Bankruptcy estate (massa falida)
The set of assets, rights and obligations of the company whose bankruptcy was declared. It is the estate, represented by the court-appointed trustee, that sells the assets at auction.
Court-appointed trustee (administrador judicial)
A professional or firm appointed by the judge to administer the bankruptcy estate: seize assets, appraise them, sell them and pay creditors (arts. 21 and 22 of Lei 11.101/2005).
Seizure of assets (arrecadação)
The act by which the trustee collects the bankrupt's assets into the estate, right after the bankruptcy is declared (art. 108).
Seizure record (auto de arrecadação)
A document that lists each seized asset, with description and appraisal. It is the first source for knowing whether a property belongs to the estate.
General creditors' list (quadro geral de credores, QGC)
A consolidated list of who is owed by the estate, with the amount and class of each claim. It defines the order of payment from the sales proceeds.
Claim filing (habilitação de crédito)
A creditor's request to enter the general creditors' list. As a rule, debts prior to the bankruptcy are filed against the estate, not collected from the buyer, except what the notice assigns to the buyer.
Concursal claim (crédito concursal)
A claim prior to the declaration of bankruptcy, which enters the concurrence of creditors and is paid in the order of art. 83.
Extra-concursal claim (crédito extraconcursal)
A claim that the law orders paid before concursal claims (art. 84), such as the estate's own expenses and obligations incurred during judicial reorganization.
Creditor classes (classes de credores)
The groups in which the law organizes claims: labor, secured, tax, unsecured, subordinated, among others (art. 83).
General creditors' meeting (assembleia geral de credores, AGC)
A meeting of creditors that decides on the judicial reorganization plan and, in bankruptcy, on creditors taking the assets in payment or acquisition by a company or fund (art. 145).
Creditors' committee (comitê de credores)
An optional body, formed by representatives of the classes, that oversees the trustee and gives an opinion on the sale of assets (arts. 26 and 27).
A period before the bankruptcy, set by the judge, in which certain acts of the debtor may be declared ineffective against the estate (art. 99, II, and art. 129).
Par conditio creditorum
The principle of equality among creditors of the same class: no one is paid before or more than their equals.
Asset realization (realização do ativo)
The phase in which the estate's assets are converted into money, by auction or another method (arts. 139 to 148).
Asset realization plan (plano de realização do ativo)
The trustee's proposal on how and in what order to sell the assets, submitted to the judge within 60 days of the appointment (art. 99, §3º).
Call (chamada; 1st, 2nd and 3rd)
Each round of bids in the auction. In the first the floor is the appraisal; in the second, 50% of it; in the third, any amount (art. 142, §3º-A).
Conditional bid (lance condicionado)
A notice device, not provided for in Lei 11.101: a bid below the call's floor, registered for the judge's and the trustee's consideration. It is valid only if the notice allows it and does not guarantee the winning bid.
Challenge to the sale (impugnação à venda)
An objection that creditors, the bankrupt or the Public Prosecutor's Office may file within 48 hours after the auction, on grounds of defect or price (art. 143).
Restitution claim (pedido de restituição)
A third party's request to remove from the estate an asset that belongs to them, such as a property under fiduciary lien (art. 85). It can reach the lot that was bought.
Isolated productive unit (unidade produtiva isolada, UPI)
A block of assets (branch or productive unit) sold together, in judicial reorganization (art. 60) or in bankruptcy (art. 140, II), with no succession of the buyer to the debtor's debts.
Conversion into bankruptcy (convolação em falência)
The turning of a judicial reorganization into bankruptcy, for breach of the plan, by creditors' resolution or in other cases of art. 73.
Distribution (rateio)
Distribution of the estate's money among creditors, in the order of the classes and proportionally within each one (art. 149).
Segregated estate (patrimônio de afetação)
Separation of the land and units of a real estate development from the developer's other assets. In bankruptcy, this estate stays outside the bankruptcy estate (art. 119, IX, and Lei 4.591/1964).
Extrajudicial liquidation (liquidação extrajudicial)
A regime for winding up banks, consortium administrators and credit cooperatives, run by a liquidator appointed by the Central Bank (Lei 6.024/1974) or, for insurers, by Susep (Decreto-Lei 73/1966), without judicial bankruptcy.
Civil insolvency (insolvência civil)
A regime applied to an individual or non-business entity whose debts exceed its assets, governed by arts. 748 to 786-A of the 1973 Code of Civil Procedure, kept in force by art. 1.052 of the 2015 Code.

To see the terms in use, read the guide to buying property at a bankruptcy auction in Brazil or open the properties for sale.

Frequently asked questions

What is the difference between the bankruptcy estate and the bankrupt?
The bankrupt (falido) is the debtor, the company or businessperson whose bankruptcy was declared. The bankruptcy estate (massa falida) is the set of that debtor's assets, rights and obligations, administered by the court-appointed trustee.
What is a conditional bid?
A notice device, not provided for in Lei 11.101: a bid below the call's floor, registered for the judge's and the trustee's consideration. It is valid only if the notice allows it and may be refused.
What does UPI mean in a notice?
Isolated productive unit (unidade produtiva isolada): a block of assets (factory, branch, brand with inventory) sold together, in judicial reorganization or in bankruptcy, with no succession of the buyer to the debtor's debts.

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