Brazil's CNJ considers new rules for court-ordered debt trading

The National Council of Justice (CNJ) is reviewing a proposal that could significantly alter the market for precatórios, which are court-ordered debts owed by the government. The new regulations aim to increase security in judicial credit negotiations and combat fraud, but market participants warn they could disrupt financial structures used by investment funds and securitizers.

The proposal, developed with input from the Attorney General's Office (AGU) and the Central Bank, would grant the federal government expanded access to information regarding the sale of these credits. This includes the ability to consult transaction values, contracts, and financing data. One aspect of the draft requires that buyers obtain consent from the opposing party to replace the original creditor during the sentence liquidation phase, a move that may conflict with previous Superior Court of Justice (STJ) rulings.

Additionally, the rules introduce stricter requirements for the direct assignment of credits, involving public deeds and electronic registration. To protect vulnerable creditors, the text proposes mandatory interviews with notaries and requires that deeds clearly detail the financial summary, including the original credit value and the discount applied. Market experts express concern that these increased operational requirements and costs could undermine the economic viability of transactions designed to provide liquidity to creditors.