{"id":94976,"date":"2025-07-18T20:20:15","date_gmt":"2025-07-18T23:20:15","guid":{"rendered":"https:\/\/murray.adv.br\/?p=94976"},"modified":"2025-07-18T20:21:06","modified_gmt":"2025-07-18T23:21:06","slug":"lawyers-warn-proposed-bill-restricts-court-ordered-debt-payments","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/lawyers-warn-proposed-bill-restricts-court-ordered-debt-payments\/","title":{"rendered":"Lawyers warn proposed bill restricts court-ordered debt payments"},"content":{"rendered":"
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\u201cPrecat\u00f3rios\u201d measure already passed by lower house and under Senate review is deemed unconstitutional under STF rulings<\/em><\/h6>\n<\/div>\n<\/div>\n
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07\/18\/2025<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n

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The proposed constitutional amendment (PEC) 66, approved by Brazil\u2019s Chamber of Deputies and now under review in the Senate, imposes limits on court-ordered debt payments (precat\u00f3rios) by states and municipalities, tying payouts to a fixed percentage of net current revenue (RCL). According to legal experts, the proposal effectively reinstates a cap on these judicial debts, a framework the Federal Supreme Court (STF) has already ruled unconstitutional. Municipalities, however, argue the measure is lawful and necessary to ensure fiscal predictability.<\/p>\n<\/div>\n

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The proposal establishes a tiered repayment system based on the size of a government\u2019s outstanding precat\u00f3rio stock relative to its previous year\u2019s RCL. If the total debt amounts to up to 15% of the RCL, the government must allocate 1% of its RCL annually to precat\u00f3rio payments. For debts between 15% and 25%, the allocation rises to 1.5%, scaling up progressively to 5% for debts exceeding 85% of RCL.<\/p>\n<\/div>\n

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Under current law, valid through 2029, governments are required to deposit one-twelfth (1\/12) of their RCL annually to cover precat\u00f3rio payments.<\/p>\n<\/div>\n

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Felipe Sarmento, acting president of Brazil\u2019s National Bar Association (OAB), said the organization is prepared to challenge the PEC in the STF \u201cto defend the rights of lawyers, businesses, and any individuals with precat\u00f3rios owed by the state.\u201d<\/p>\n<\/div>\n

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Vitor Boari, chair of OAB S\u00e3o Paulo\u2019s Special Committee on Precat\u00f3rios, confirmed that the state chapter is preparing to file an injunction request if the PEC is enacted. Among lawyers, the proposal has been dubbed the \u201cdefault PEC.\u201d<\/p>\n<\/div>\n

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\u201cBefore the vote, we warned that the substitute text contradicted multiple STF rulings on the same issue,\u201d Mr. Boari said. He noted that the S\u00e3o Paulo city government currently allocates R$4.8 billion annually to precat\u00f3rio payments, which would fall to R$2.4 billion under the new scheme. \u201cIf they can\u2019t clear the backlog with R$4.8 billion, they certainly won\u2019t with R$2.4 billion, which is why the PEC includes a ten-year review clause \u2014 but that won\u2019t fix the problem,\u201d he said.<\/p>\n<\/div>\n

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Gilberto Perre, executive secretary of the National Front of Mayors (FNP), argues there is no constitutional violation. \u201cWe are applying the legal concept of the \u2018reserve of the possible,\u2019 meaning the state must operate within the limits of its finite resources. This cap gives governments predictability and planning capacity,\u201d Mr. Perre said.<\/p>\n<\/div>\n

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He noted that precat\u00f3rios are imposed by the Judiciary, leaving municipalities without control over the amounts, which can unexpectedly strain budgets. Without a payment cap, Mr. Perre warned, essential services could deteriorate, and municipal investment capacity would be impaired.<\/p>\n<\/div>\n

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Mr. Perre also defended the PEC as a long-term solution that would prevent Congress from repeatedly passing stopgap measures to extend payment deadlines. \u201cThis is the most intelligent and organized approach we\u2019ve seen to tackle this issue,\u201d he said.<\/p>\n<\/div>\n

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Tax law experts have also criticized changes to payment discount rules and indexation. Currently, creditors can accept up to a 40% discount for early payment; the PEC removes this ceiling. It also modifies how precat\u00f3rios are adjusted for inflation. \u201cThey are trying to forcibly erode precat\u00f3rio values over time,\u201d Mr. Boari said.<\/p>\n<\/div>\n

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States and municipalities have already benefited from precat\u00f3rio repayment extensions under constitutional amendments 30 (2000) and 62 (2009), both partially overturned by the STF. Amendment 30 allowed debts to be paid over ten years but was ruled unconstitutional in 2010. Amendment 62 established a special repayment regime of up to 15 years, which the STF declared unconstitutional in 2013 but partially upheld through 2020 after modulating the decision\u2019s effects.<\/p>\n<\/div>\n

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\u201cSTF rulings have consistently made it clear that no rule enabling indefinite payment of these debts will stand,\u201d said Marco Antonio Innocenti, partner at Innocenti Advogados and head of the Precat\u00f3rios Studies Commission of the S\u00e3o Paulo Lawyers Institute. Innocenti warned that the PEC risks sending an already managed debt into complete disarray.<\/p>\n<\/div>\n

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\u201cWhen the STF strikes down a rule, it is removed from the legal system and cannot be reintroduced by Congress, not even via constitutional amendment,\u201d Mr. Innocenti argued, stressing that this is a well-established precedent affecting individual creditors.<\/p>\n<\/div>\n

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The National Committee of State Finance Secretaries (Comsefaz) counters that PEC 66 is not harmful to creditors, as it merely reorganizes the payment schedule and states can pay more than the minimum thresholds if fiscal space permits.<\/p>\n

*By\u00a0Beatriz Olivon\u00a0and\u00a0J\u00e9ssica Sant\u2019Ana\u00a0\u2014 Bras\u00edlia<\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com\/<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

\u201cPrecat\u00f3rios\u201d measure already passed by lower house and under Senate review is deemed unconstitutional under STF rulings       07\/18\/2025 The proposed constitutional amendment (PEC) 66, approved by Brazil\u2019s Chamber of Deputies and now under review in the Senate, imposes limits on court-ordered debt payments (precat\u00f3rios) by states and municipalities, tying payouts to a […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8106],"tags":[],"class_list":["post-94976","post","type-post","status-publish","format-standard","hentry","category-murray-news"],"yoast_head":"\nLawyers warn proposed bill restricts court-ordered debt payments - Murray Advogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/murray.adv.br\/en\/lawyers-warn-proposed-bill-restricts-court-ordered-debt-payments\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lawyers warn proposed bill restricts court-ordered debt payments - 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