Feijó Lopes Advogados’ Post

The novel coronavirus will certainly have impacts on foreign lenders and insurers' exposed to Brazil. Except for specific sectors, borrowers and guarantors' businesses are already facing cash retrains, default on covenants, and judicial recovery scenario. Based on that, foreign lenders and insurers should consider: 1. Risk Assessment: Assess (i) exposure of borrower's business to Covid-19, and (ii) existing documentation, rights, remedies, and notice requirements; 2. Collateral: Check on collateral to confirm whether (i) assets are properly safeguarded. Immediately approach borrower to seek collateral enhancement in case needed/possible, and (ii) it is duly registered; 3. Brainstorming: (i) Form a multi-area team to brainstorm worst, probable, and best scenarios and actions. (ii) Design an action plan and start putting it to work. Experience in Brazil shows that proactiveness improves chances to neutralize or mitigate risks of material default; 4. Restructuring: (ii) Keep open channel with borrower to identify restructuring needs and risk of judicial recovery relief. (ii) If restructuring is needed, choose proper type of legal instruments to preserve rights and prerogatives. The steps above should be of help to navegate exposures in Brazil during such adverse conditions.