After bankruptcy decree, Livraria Cultura says it intends to appeal the decision

After the Justice of São Paulo decreed the bankruptcy of Livraria Cultura, the company informed this Friday (10) that it intends to appeal the decision.

“Livraria Cultura informs with great surprise the decision that arrived at the end of the afternoon of 09/02. At this time, we will analyze the judge’s decision, but we intend to appeal,” the company said in a statement.

The bookstore claims that “there are more appropriate solutions for the company, seeking its recovery, than bankruptcy”.

The company also states that the “operations of the two physical stores (Conjunto Nacional in São Paulo, and Bourbon Shopping Country in Porto Alegre), website and other channels remain normally in operation”.

According to Fernando Brandariz, specialist in business law and partner at Mingrone & Brandariz Sociedade de Advogados, the deadline for appealing and presenting arguments is 15 days.

But, according to the specialist, it is not an easy situation for the bookstore. “Most companies that receive the bankruptcy decree appeal if they have money to pay the costs and lawyer. But reversing the decision of the Court of Justice will depend on the argument they have”.

For this reason, Brandariz says that the bookstore will not close its doors immediately. There is a deadline to appeal and file an interlocutory appeal to try to reverse this decision of the judge of first instance.

The lawyer recalls that the bookstore filed for judicial recovery in 2019. Then, they made an amendment in September 2020, but it was not approved by the creditors. The consequence of this was the bankruptcy decree.

“Apparently, the judge is unlikely to reverse the situation. Livraria Cultura has not been repeatedly complying with the recovery plan for a long time, nor has it paid the judicial trustee – who had to be replaced for this reason”, he points out.

According to the decree, the Justice dismissed the judicial administrator who was taking care of the recovery of the bookstore, Alvarez & Marsal, as they were not being paid for the service. The Justice then appointed Laspro Consultores to take over the management of the recovery.

Brandariz also points out that, as stated in the bankruptcy decree, new manifestations were presented by the trustee, highlighting the non-compliance with the current obligations of the judicial reorganization addendum, as well as reports of evidence of fraud in financial transactions carried out by bookstore partners.

It is worth mentioning that the judge determined that, in the next 48 hours, the assets, documents and books, as well as the evaluation of these assets, should be identified. Financial assets and accounts in the name of the bookstore and 3H Participações (the holding company that controlled the company) must be blocked.

Business model

According to economics professor at the FIA ​​Business School, Carlos Honorato, when the judge declares bankruptcy, it means that those judicial recovery processes have not been fulfilled.

“The company may not come to finalize operations immediately, but the trend is that the last one to leave, turns off the light. An operation like Livraria Cultura doesn’t have much going on. The trend is that there will be no more products, employees will no longer go to work and the customer is also afraid because he does not know what he has to buy”, points out the economist.

Honorato emphasizes that what harmed Livraria Cultura’s finances was the business model that the company followed. “Several companies had to change due to the digitization of retail, and those that did not follow this trend, were left behind and were unable to rise again”.

He further added that it is unsustainable to maintain a place where people come in, read a free book and drink coffee. “There is no way to go forward and it is not sustainable in the world that, today, people get books online for a more affordable price”, says the professor.