TozziniFreire steers IFC on a fiduciary operation

TozziniFreire Advogados has advised International Finance Corporation on $27.5m operation

TozziniFreire Advogados has briefed International Finance Corporation on $27.5m operation which fits in the new Brazilian legal frame.

Brazilian security structure comprises the fiduciary transfer of irrigated agricultural land. This structure represents a new landmark, and a helpful tool, for foreign creditors who take rural land as collateral in Brazil. Until recently, Brazilian regulation had uncertainties as to the possibility for foreign creditors to receive rural lands as guarantees under the fiduciary transfer structure. The novel Law No. 13,968/2020 had explicitly authorized foreign creditors to be guaranteed through a fiduciary transfer of rural land. Differently from ordinary mortgages-where creditors need to foreclose the property on court-the fiduciary transfer allows the immediate transfer of the property to the creditor, who can only sell it on or out-of-the-court upon the default of the agreement secured by the fiduciary transfer. The fiduciary transfer authorizes the debtor to use (but not the disposition of) the property to the extent no event of default has occurred.

The operation is divided into three loans: A1 Loan: R$90 million ($18 million), A2 Loan: $2 million, and B1 Loan: $7.5 million. Besides, each of the tranches under the Loan Agreement is secured by promissory notes governed by Brazilian law issued by the Borrower. Also is important the fact that creditors secured by fiduciary transfers are not subject to bankruptcy effects of the debtor, which represents an important bolster for creditors.

TozziniFreire team was led by partner Kenneth Antunes Ferreira (pictured), and involved associates Felipe Paiva, Ricardo Fiuza, Natasha Wiedmann, and Vanessa Valdivieso.