Federal government orders can be used to purchase shares of Crown corporations

Federal court order holders can buy shares in privatized companies, such as Eletrobras. Photo: Disclosure

Federal government court rulings can be used as a bargaining chip in the purchase of shares in privatized companies, and this could already apply to the privatization process of Eletrobras and Correios, if that advance to the National Congress. The possibility was reported off-screen by an interlocutor of the economic team in the newspaper “Valor”.

The proposal to use court decisions as the “currency” of privatization is foreseen in the CEP, which allows the Union to pay court decisions in installments – debts which are no longer subject to appeal, since they are already passed by all the judicial bodies.

In practice, the government would allow creditors to buy shares in the process of privatizing state-owned enterprises and, in return, repay debts. It is not clear in the proposal whether there will be any “discount” on the value of court orders in this process. “[A PEC estabelece] the use of court orders, previously foreseen for the payment of the purchase of public real estate, also as currency of privatization, for the acquisition of the Union’s stake in public enterprises ”, states the PEC.

According to what is provided for in the proposal under consideration in Congress, preventive orders of more than 66 million reais can be paid in ten installments, or 15% in cash and the remainder in annual installments. Other court orders may be paid in installments if the total sum of court orders is greater than 2.6% of the federal government’s current net revenues.

If approved, the proposal will lead to another change: all court decisions will be corrected by the Selic rate, regardless of their nature. Today, due to the STF decision on ADI 4425, the indices used depend on the nature of the precatório, which can be Selic or IPCA + 6%.

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