Stay period: the shield in judicial reorganization
The stay period is the suspension of enforcement actions that usually gives breathing room to a company in judicial reorganization. Understanding this period helps clarify how negotiation with creditors works.
What the stay period is
The stay period is the name given to the period of suspension of lawsuits and enforcement actions against the company, provided for in the Judicial Reorganization Law. During this period, as a rule, creditors are temporarily barred from pursuing collection, which usually creates room for negotiation.
Why it is called a shield
The term shield is used because, while the period is in effect, the company tends to be protected from measures that could compromise its activity, such as certain attachments of assets. This protection, however, is not absolute and has exceptions.
What is usually suspended
- Enforcement actions underway against the company in reorganization
- Acts to collect claims subject to the proceeding
- Certain attachment measures over assets essential to the activity
Limits and exceptions
Not all claims and actions are reached by the suspension. Some types of claim may receive different treatment, as provided by law. For this reason, the scope of the stay period depends on the nature of each obligation and on the analysis of the case.
Duration of the period
The Reorganization Law establishes the suspension period and the conditions under which it applies. In general, it is a fixed period whose details and any developments are worth checking in each situation.
Frequently asked questions
How long does the stay period last?
It is a suspension period provided for in the Judicial Reorganization Law. Since the conditions and any developments depend on the case, it is advisable to check the specific situation to confirm the scope.
Does the stay period suspend all of the company's debts?
No. The suspension reaches, as a rule, the claims subject to the proceeding, but some types of claim receive different treatment. The scope depends on the nature of each obligation and on the analysis of the case.
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