First maritime cross-border insolvency proceeding is recognised by a Brazilian Court after the recent adoption of the UNCITRAL Model Law

Tuesday 18 October 2022

Olympio Carvalho

Castro Barros Advogados, Rio de Janeiro


Ana Carolina Reis do Valle Monteiro

Kincaid – Mendes Vianna Advogados, Rio de Janeiro


Ian Thomaz

Castro Barros Advogados, Rio de Janeiro


On 23 January 2021, Law no. 14,112/2020 came into force in Brazil, bringing forth important amendments to the Brazilian Insolvency Act (Law No. 11,101/2005). Top among them is the adoption of United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency, following the example of more than 50 other jurisdictions.

Prior to that, the Insolvency Act was silent about transnational cases, which raised a number of questions. An example is the judicial restructurings of Brazilian groups with foreign subsidiaries, which is increasingly common in the maritime and O&G sectors, such as Sete Brasil, OSX, and Constellation (former Queiroz Galvão Óleo e Gás). These were often a source of conflicting parallel litigation in different countries, with discussion as to when foreign entities could be restructured by the Brazilian courts, when foreign insolvencies would be respected by the local courts, whether foreign trustees could or could not liquidate assets located abroad and so forth. There were no rules on international cooperation in this field, which was a source of much uncertainty in cross-border cases.

Now Brazil has moved from this dire situation to having the most acclaimed and well-known set of rules in cross-border insolvency (adopted by more than 50 countries, as mentioned). The Model Law brings a legal framework that allows a debtor to have just one main proceeding in the jurisdiction of its Centre of Main Interests (COMI), which will deal with all of its assets and creditors around the globe (with just one payment plan considering the sale of assets around the globe, for instance). This is with the cooperation of the courts of the other relevant jurisdictions. This will certainly improve the efficiency of transnational insolvency cases in Brazil and, as a result, the general business environment in the country.

This is especially welcomed by the maritime industry, which is highly international. Vessels can (and tend to) transit from one country to the other and are normally flagged in (and therefore bear the nationality of) a country that is different from shipowner’s one, carry crew and cargo from a number of other jurisdictions, receive bunkers in a number of other jurisdictions, are insured in a different country, and so forth. Thus, insolvencies in this industry are normally cross-border, involving players and assets in a multitude of jurisdictions. 

Unsurprisingly, the first foreign insolvency proceeding recognised by a Brazilian court involved the maritime industry. Two different entities of the Norwegian group Prosafe (Prosafe SE, the Norwegian parent, and Prosafe Rigs PTE Ltd, a Singaporean subsidiary), applied before the Courts of Rio de Janeiro


[1] for the recognition of two separate moratorium protection proceedings brought before the High Court of Singapore[2] as the foreign main proceeding. Hence the application in Brazil of the orders from such Court.[3] Prosafe group had three foreign-flagged semi-submersible accommodation vessels in Brazilian waters close to Rio (out of the total of seven vessels that the group owned), and two of them were employed by Petrobras. Further, it had a local subsidiary located in Rio. These assets in Brazil could be arrested or seized by creditors if such protection was not extended to Brazil.

Upon Prosafe’s application for an  interim urgent injunction, the Court quickly recognised the moratorium protection as a foreign main proceeding, and extended to Brazil the order that, the period set forth by the Singaporean Court: (i) no resolution for the winding up of the applicants could be passed; (ii) no appointment of a receiver or manager over any property or undertaking of the applications could be made; (iii) no proceedings whether before a court, arbitral tribunal, administrative agency could be commenced or continued, except with the leave of the Court and subject to such the terms as it imposes; and (iv) no execution, distress or other legal process could be commenced, continued or levied against any property applicants, except with the leave of the Court and subject to such the terms as it imposes, among other orders.

Further, in the same decision, the Brazilian Court recognised Prosafe’s CFO, who had brought this application, as its foreign representative designated by the High Court of Singapore.

In another decision during the following months, the Court of Rio also recognised extensions of the moratorium protection period granted by the Singaporean Court, and finally recognised the ‘Scheme of Arrangement’ proposed by Prosafe and approved by its creditors and the Singaporean Court.


This is, as mentioned, the first case in which the Brazilian Courts applied the new rules based on the UNCITRAL Model Law on Cross-Border Insolvency, and thus cooperated with a foreign Court in this field. And it did so quickly and smoothly.

Prior to that, to achieve such a protection in the country, the foreign debtor would have to apply for judicial restructuring or another similar proceeding in Brazil, which would be more complex and costly, also being duplicative of the foreign proceeding in many ways. And it would also raise concerns as to whether the Brazilian Courts would have jurisdiction for this (at least in relation to the assets not belonging to the Brazilian entity). The other option would be to wait for the foreign proceedings to reach a final unappealable judgment that could be recognised by the Superior Court of Justice (probably the one that approves a scheme of arrangement or similar), but this could happen too late in many situations.

Prosafe’s case is also important because Brazil is one of the countries with the largest number of offshore support vessels in the world, many belonging to Norwegian or Singaporean companies and employed by Petrobras, as in this case.

Thus, the quick and efficient outcome of this transnational insolvency case is likely to encourage other similar cases before the Brazilian Courts, and also encourage other foreign companies to invest in the country, now that they can better foresee what will happen in the unfortunate case it needs to resort to the protection of global insolvency laws.


[1] Ana Monteiro, one of the authors of this article, acted as one of Prosafe’s counsel in these proceedings. 

[2] Under Section 64 of Singapore’s Insolvency, Restructuring and Dissolution Act 2018.

[3] Proceedings no. 0129945-03.2021.8.19.0001 and 0130229-11.2021.8.19.0001 in Brazil (HC/OS 422/2021 and HC/OS 425/2021 in Singapore, respectively).