Unigel filed for judicial recovery on 8 October and had its bankruptcy protection request admitted for review today (9 October). In the same decision, Judge Paulo Furtado de Oliveira Filho, of the 2nd Court of Bankruptcies in São Paulo, awarded the Brazilian petrochemical producer a 180-day stay period protection, during which creditors are prevented from commencing or moving forward with individual debt enforcement measures.

At first glance, this portion of the case admission ruling is in line with Brazilian bankruptcy law. Section 6, § 4 of the law sets forth that the stay-period protection should last for that period and may be extended only once, for up to the same period, provided that the company did not intentionally contribute to delay the development of the case.

In this case, however, the mere application of this section of the law should not be enough to deal with the matter. Prior to the judicial recovery petition, on 12 August, the company filed a precautionary measure with the same court, which awarded it an injunction preventing potential debt enforcements for a 60-day period.