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06/04/2025 1

Disapproval of President Lula’s government reached 57% in May, the highest level since the start of his third term, according to a Genial/Quaest poll released on Wednesday (4). In the previous survey conducted in March, the disapproval rate was 56%. Approval now stands at 40%, down from 41% in the last poll, which had already marked the worst result since official records began.

The changes are within the margin of error of two percentage points. Since January, disapproval has risen by 8 points, while approval has dropped by 7 points. The latest edition of the bimonthly survey interviewed 2,004 respondents between Thursday (29) and Sunday (1).

Negative evaluations of President Lula’s government also increased slightly, reaching a historical peak of 43%, up from 41% in March. Positive evaluations fell from 27% to 26%. Those rating the administration as “regular” dropped from 29% to 28%. The percentage of Brazilians who believe the country is heading in the wrong direction rose to 61%, up from 56% in March and 50% in January. Meanwhile, 32% believe Brazil is on the right track, compared to 36% and 39% in the two previous rounds.

For the first time, disapproval of President Lula’s government surpassed approval among Catholics, at 53% to 49%. In March, approval and disapproval were tied at 49%. Catholics had previously shown more support than Evangelicals, a group historically more critical of the president. In the latest survey, disapproval among evangelicals stood at 66% (down from 67%), while approval was 30% (up from 29%).

The survey also indicates worsening figures in Mr. Lula’s traditional support voting bloc. His government is disapproved of by 54% of women, 47% of those with only basic education, and 49% of those earning up to two times the minimum wage—all segments showing an upward trend within the margin of error.

Regionally, President Lula’s approval outweighs disapproval only in the Northeast, where 54% support the government and 44% oppose it. In the more populous Southeast region, disapproval stands at a record 64%, while it reaches 62% in the South and 55% in the Central-West.

Improved economic perception

Despite confirming Mr. Lula’s popularity crisis, the survey shows an improvement in economic perceptions. The percentage of respondents who believe Brazil’s economy has worsened fell to 48%, down 8 points from 56% in March. Meanwhile, 18% say the economy has improved (up from 16%), and 30% believe it has stayed the same (up from 26%).

There was also some improvement in approval ratings among those familiar with recent government initiatives. For the proposal to exempt income tax for those earning up to R$5,000 per month, 56% had heard of it, and 45% approved. Regarding the new gas voucher program (Vale-Gás), 59% were aware of it, and 49% approved.

In a report released alongside the poll, political scientist and Quaest CEO Felipe Nunes described the scenario as a paradox, attributing the contradiction to the “widespread impact of negative news.” He noted that cases such as the social security fraud scandal at the National Institute of Social Security (INSS) have diluted positive impacts in other areas.

According to the survey, 56% believe the current Lula administration is worse than his first two terms. In comparison with former President Jair Bolsonaro’s administration, 44% believe Lula’s current term is worse, while 45% think the government is performing below expectations.

Social security scandal and IOF tax increase

Some 82% of respondents said they were aware of the INSS fraud scandal. Among them, 31% blamed Lula’s government, 14% cited the INSS itself, and 8% pointed to Bolsonaro’s administration—the same percentage as those blaming the organizations that forged retirees’ signatures. Another 26% said they did not know or did not respond.

Half of the respondents (50%) support opening an Investigative Parliamentary Committee (CPI) to investigate the INSS scandal, while 43% believe a Federal Police investigation is sufficient and that the opposition is only seeking to undermine the government.

Regarding the recovery of embezzled funds, 52% said the government should focus solely on reclaiming assets frozen from the implicated organizations, while 41% said the money should be returned even if public funds are needed.

Regarding changes to the Tax on Financial Transactions (IOF), fewer respondents were aware of the issue (39%) than those unaware (58%). Of those who knew, 41% approved of the government’s decision to reverse the IOF hike on investment funds, while 36% disapproved.

However, regarding the maintenance of the IOF increase on dollar purchases by individuals and remittances abroad, 50% said the government was wrong, and 28% said it was right.

Violence and corruption among top concerns

Violence remains the top concern for Brazilians, cited by 30% of respondents. It is followed by social issues (22%) and the economy (19%).

The fourth spot saw a shift compared to March: health, previously ranked fourth with 12%, was displaced by corruption, now cited by 13% (up from 10%). Health dropped to fifth place with 10%. Education ranked sixth at 6%.

*By Joelmir Tavares, Valor — São Paulo

Source: Valor International

https://valorinternational.globo.com/

Crisis generated by pandemic still impacts companies, which are seeking out-of-court settlements

10/06/2022


Since the beginning of the pandemic, never have so many companies gone bankrupt as in the first eight months of this year. Between January and August, 474 companies went bankrupt, 9% above 2021 and 1.5% higher than in 2020, data collected by credit bureau Serasa shows. At the same time, the search for out-of-court debt renegotiation reached the highest level in five years.

Also according to Serasa’s survey, from January to August there were 15 out-of-court agreements. The previous peak, of 30 in the same period, had been in 2017. In these situations, a judge is appointed only to oversee the case and monitor compliance with the law – and ratifies or not the plan agreed upon by the parties.

Lawyers understand that the crisis generated by the pandemic still impacts operations, but the number of companies that have closed their doors is still far from the peak of the decade seen in the 2015-2016 recession. In that period, there were, on average, 1,100 bankruptcies per year.

The higher number of defaulting companies has been the main indicator of this deterioration in business, Serasa’s economic team said.

“In August, there were 6.2 million companies with debt [versus 5.8 million a year earlier] for a total of 22 million active firms in the country. Even when the number of bankruptcies drops, if this number goes up, for us it is a warning sign,” said Luiz Rabi, an economist with Serasa.

Antonio Mazzucco — Foto: Divulgação

Antonio Mazzucco — Foto: Divulgação

“The banks took the pressure off the companies [until 2021] because they renegotiated contracts at the beginning of the pandemic,” said Antonio Mazzucco, a founding partner at the law firm Mazzucco & Mello. “But the maturities of those renegotiated debts returned as of this year, and will extend through 2023 when we will see even more attempts to make agreements as economic activity is still recovering.” His firm represented creditors in the Ricardo Eletro reorganization process and the lawsuit of the lighting company Bronzearte.

According to Laura Bumachar, a lawyer specializing in judicial recovery, civil litigation, and arbitration at Dias Carneiro Advogados, “this scenario is expected to continue this way next year due to the current economic uncertainty,” and because she does not believe in a permanent solution for the business without the injection of new capital into the companies.

“The current environment of insecurity about the economic activity and expensive money, with the escalating [Brazil’s key interest rate] Selic, do not contribute to creating competitive lines or to the search for companies open to some partnership,” she said.

From January to August 2021 and 2022, there were 40 requests for out-of-court reorganization, of which 19 were approved after the OK of banks and suppliers. As those negotiations are long, extending over months, it is more appropriate to consider periods longer than a year to get a more accurate picture of the situation.

For comparison purposes, from 2015 to 2016, another period of strong economic crisis, there were fewer cases, with 24 requests and 14 granted in the two years until August (before the new judicial recovery law, in force since 2021).

According to attorney Vitor Ferrari, with Mazzucco & Mello, mediations in scenarios in which creditors identify feasible payment schedules and business resumption planning are welcome. “We have a case of a client with R$260 million in liabilities and we are managing to negotiate because the banks are open to this case. The payment terms expired in March and were extended for more 12 months,” said Mr. Ferrari.

“Nobody wants a partner in default if there is room for agreement. But renegotiations made in 2020 and 2021, with payment terms of up to 36 months, will come partly this year and next year.”

One of the main positive data from the survey shows 520 recovery requests from January to August this year. That’s less than half the numbers for 2015 and 2016, and 19% lower than the previous year.

This happens exactly at the same time that out-of-court mediations have gained some traction. “There is more openness and tools available today in the search for agreements, in a more mature model than 10 or 20 years ago, well before the changes in the recovery and bankruptcy law,” said Mr. Rabi.

Also according to the analysis, six out of 10 requests for recovery in court (62%) were approved from January to August 2021 and 2022.

This rate is more than double the rate of 24% of requests granted in the interval between 2015 and 2016, when the new recovery law (Law 14.112 of 2020), was not yet in force.

Experts understand that those numbers of judicial recoveries were impacted by the more active stance of the judiciary system, which is maintaining channels of negotiations between companies and creditors, and by a greater willingness of creditors to seek agreements — although the high debt discounts presented in the plans, by debtors, are being criticized.

“There are recent proposals submitted by companies with a 90% haircut. The economic benefit to the creditor in the agreements is very low,” said attorney Ronaldo Vasconcelos, a partner at VH Advogados and a professor of law at Mackenzie University.

There is still criticism of cases that do not come to an end because debtors fail to comply with their recovery plans. “There are cases of recoveries that go on and on for years. Just look at Oi and Inepar. Inepar had an eight-year recovery and more than 25 court enforcements. Certain courts are very pro-business in a bad situation because of the social effect, and that don’t consider the effects to creditors, to the market, of the decisions,” says a court administrator and lawyer who has been in the sector for 25 years.

Today, according to the law, it is the creditors who have the power to reject plans and take a company into bankruptcy. The courts follow and make sure that the legal procedures are followed, and decree bankruptcy when there are certain violations. This allows companies to continue operating if they comply with the terms of the approved plan.

The Serasa Experian Bankruptcy and Judicial Recovery Indicator is built from monthly statistics on bankruptcies and recoveries from courts across the country and the Daily Gazette.

*By Adriana Mattos — São Paulo

Source: Valor International

https://valorinternational.globo.com/