A Judicial reorganization in light of the social function of the enterprise

An Analysis in Light of Article 47 of Law No. 11,101/2005 and the Cram Down Mechanism

Abstract

This article aims to analyze the application of the Cram Down mechanism in Brazilian judicial reorganization as an instrument for safeguarding the social interest, with a view to ensuring procedural celerity and preventing the bankruptcy of companies that hold social relevance beyond their economic importance. The study is based on the premise that judicial reorganization, regulated by Law No. 11,101/2005, prioritizes the preservation of viable enterprises in light of their social and collective role. The research questions to what extent the Cram Down mechanism—by allowing the judge to impose the Reorganization Plan on creditors—is justified in protecting a broader social interest. Accordingly, the central hypothesis holds that the application of this mechanism is fully justifiable, as it ensures the maintenance of the productive source and jobs in an efficient manner, giving precedence to the principle of preservation of the enterprise and its social function over individual interests. The methodology is qualitative in nature, with a design based on a case study, bibliographic research, and documentary analysis of legal and academic materials. The article seeks to identify how the use of the Cram Down mechanism is consolidated as a legal instrument to protect social interests beyond purely economic considerations. Thus, it is expected that the analysis of the effectiveness of the Cram Down within the context of Law No. 11,101/2005 will contribute to the legal and academic debate on the protection of social interests in Bankruptcy Law, reinforcing the importance of procedural celerity in order to avoid negative impacts on the society in which a company undergoing reorganization is embedded.