What distinguishes your chapter
in membership makeup?
TMA’s Brazilian Chapter is very active
in educating members, associates, and
society. We have been working since
inception to address the Brazilian way
of viewing and conducting turnaround
and restructuring in alignment with
international rules of ethics and
technicality. The results are mostly
visible when financial institutions and
other stakeholders in our marketplace
recognize the message of corporate
renewal that we, as the only TMA chapter
in Latin America, have brought to this
industry since our inception in 2009.
a big improvement in restructuring
rules in Brazil when compared with
previous laws that are very outdated.
JR came into effect with the new
Brazilian bankruptcy law in 2005.
On the other hand, bankruptcy
liquidation in Brazil, which is equivalent
to the Chapter 7 process in the U.S., is still
a lengthy, costly, and value-destroying
proceeding that needs improvement.
3 If turnaround practitioners from North America are working in
Brazil, what advice would you offer
about facilitating cross-border
They are strongly advised to have a
local partner or presence with local
professionals in Brazil, given the
importance of the particularities
in the legal, cultural, and network
environment of Brazilian turnarounds.
6 Can you recount a favorite restructuring case?
My favorite case is code-named “Project
Business” since I may not identify
the company. It involved a chain of
shops specializing in furniture and
home appliances. The company filed
for protection under the Brazilian
bankruptcy law. It was a landmark in
the application of the new bankruptcy
law in Brazil, successfully testing the
implementation of a provision similar to
Section 363 of the U.S. Bankruptcy Code.
Salvatore Milanese, TMA Brazil
one of the largest bankruptcies ever;
Varig, Brazil’s leading airline; Group
Doux, one of the largest food producers
worldwide; and BenQ, entailing the
liquidation of its subsidiary in Brazil.
2 What is the principal way in which the insolvency process in
your country differs from the
restructuring process in the U.S.?
Brazilian bankruptcy proceedings
are very similar to the U.S. formal
restructuring process. The most
important proceeding is called
judicial reorganization (JR), which
allows a debtor to ask for protection
under the law during a period of 180
days while the debtor prepares and
negotiates a reorganization plan with
its creditors. JR provides rules very
similar to the U.S., including allowing
for DIP financing and Section 363
provisions guiding the sale of assets
free and clear of liabilities. Although
JR has many untested provisions and
others to be improved, it represents
4 How did you begin your career in the turnaround industry?
I started in the banking industry
managing the bank’s investments
and handling workouts whenever
necessary. Afterwards, I turned around
my career and started devoting
my time and advice to debtors as
a consultant for KPMG Brazil.
7 Do you have a favorite quote or motto that anchors you as you
work? When I work on a restructuring
case I say to my team and sometimes to
the client: “Restructuring is mainly about
making a plan happen … which means
5 Have you participated in any notable cases?
Sure, some of them are: Enron through
its Brazilian subsidiary Elektro; Parmalat,
Salvatore Milanese, a partner with KPMG Corporate Finance Ltda. in São Paulo, has served as TMA Brazil Chapter president since 2011.
European Sovereign Debt Crisis –
An Opportunity or Threat?
BY DANIEL MARTIN
The outbreak of the European sovereign debt crisis at the end of 2009 has presented new challenges
and uncertainties to the developed and
developing world economies. While
the European Union struggles to rein
in the sovereign debt crisis and prevent
it from spreading through its member
countries, new governments in Italy
and Greece have emerged and austerity
measures have caused numerous riots
on the streets of Athens. Given the
challenges facing EU countries, what
effect has the European sovereign debt
crisis had on the China growth story?
The Chinese export sector, in recent
years, has been the key to China’s
economic success, as global firms
have turned to China to take advantage
of its low-cost manufacturing base.
However, increasing labor costs,
higher commodity and raw material
prices, and a slowdown in demand
from the U.S. due to its high rate of
unemployment have slowed the pace
of export growth in recent months.
China’s exports fell in January 2012,
the first decline in more than two
years, raising fresh fears about the
impact of the global slowdown on
the economy. Exports declined by
0.5% from a year earlier, hurt by lower
demand and factories being shut
down during the Lunar New Year.
However, more significantly, imports
declined by 15.3% from a year earlier.
This suggests that domestic demand
is beginning to slow down in one of
the world’s largest domestic markets.
The EU is one of China’s largest export
markets, and the continuing lack of
certainty in the EU over the sovereign
debt crisis is beginning to severely hurt
consumer confidence and dent the
demand for Chinese goods. Official
figures showed that bilateral trade