In light of the current situation we identify the following liabilities’ risks of managing directors in Brazil:
1) Due to the current situation and imposed lockdown of several business, it may be difficult to comply with and execute all obligations (for instance: to obtain and fulfill all the required information in the business documents), which may impact, reduce or prevent the company to do its regular business;
2) Due to the decrease of business and cash flow, payments of contracts and obligations in general may be delayed or even suspended;
3) Increase in the requests to renegotiate contracts and obligations, as well as the termination of commercial relationship in case of obligations become impossible or very expensive to be fulfilled and/or paid;
4) Reorganizing production and resources. Some demand in sectors of the industry will be be severely affected by a dramatic contraction of the market (i.e. consumer durable goods), while others while maintaining their demand will face potential bottlenecks in production and distribution (i.e. access to raw materials, restricted logistics due to roadblocks and restriction to air traffic, limited workforce due to commuting problems and effects of the COVID itself over them)
5) Dealing with potential layoffs in those sectors affected by a decrease in demand. The termination of employment agreements itself leads in general terms to higher costs in the short run in view of mandatory severance payments.
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