6 Brazil

Subject(s):

Banks and cross-border issues — Debt — Monetary obligations — Contractual set-off — Insolvency set-off — Judicial set-off

This chapter provides an overview of the law of set-off in Brazil. The Brazilian Civil Code, enacted on 10 January 2002, contains the necessary provisions for set off regarding credit and debts. Set-off differs from the concept of netting. Netting refers to an indirect discharge of obligations and must meet certain requirements before it can automatically apply, namely: debts must be certain and liquid, matured, and comparable. After discussing the distinction between set-off and netting in Brazil, the chapter considers set-off between solvent parties. In particular, it explains statutory set-off, contractual set-off, and the principle of manifestation of will. It then examines set-off against insolvent parties, focusing on bankruptcy and judicial or out-of-court reorganisation proceedings. It also describes bank insolvency and civil insolvency proceedings before concluding with an analysis of issues arising in cross-border set-off.