Justice determines transfer of Eldorado to Paper – 03/21/2023 – Market

Justice confirmed this Tuesday (21) the transfer of command of Eldorado Celulose to Paper Excellence —which bought the company from the Batista brothers, from J&F, but has not yet taken control because of an open dispute by the sellers.

J&F sold control of Eldorado to Paper for around BRL 15 billion in 2017, but later questioned the values ​​and tried to reverse the deal.

There was no agreement and, therefore, an arbitration process was opened between the two parties, which ended with the victory of the Indonesian group. Even so, the transaction did not materialize because the Batistas asked for the annulment of the arbitral award in court.

Joesley and Wesley Batista had been trying to delay the transfer of control as much as possible. The transfer of shares had not occurred due to an appeal by J&F to Judge Costa Netto, which was overturned by Judge Franco de Godoi, of the Court of Justice of São Paulo, this Tuesday.

In the dispatch, Godoi claims that his colleague’s decision has “no legal repercussions” because he is not the competent magistrate to judge the case.

Judge Godoi determines that the arbitration commission proceed with the procedures for the transfer of shares until the merits of J&F’s initial appeal are decided — whether the arbitration process was valid or not.

Costa Netto’s previous decision, however, contradicts Godoi. Therefore, J&F considers that there are currently two valid sentences, an unusual situation.

The case creates legal uncertainty in the country by opening loopholes for arbitral awards to be discussed in court. For this reason, foreign groups now elect courts in the US as a forum for resolving disputes originating in Brazil.

The arbitration surrounding the sale of Eldorado took place between 2019 and 2021 at the International Chamber of Commerce (ICC), which unanimously recognized Paper’s right to take control of the company.

J&F did not accept the result and decided to ask the Court to annul the arbitration, whose sentence came out in February 2021. Among the various reasons, the company claimed damages due to failures in the conduct of the process.

The Batistas’ company claims to have been the target of a hacker attack allegedly promoted by rivals in the arbitration – which would have caused irreparable damage to the negotiation.

The Justice of São Paulo has already closed an inquiry that found out whether Paper executives were responsible for spying attacks on emails from the board of J&F. The case had already been the subject of another similar inquiry — also archived.

Through its advisory, J&F informed that the processing of the annulment action and the arbitration procedure is suspended due to a conflict of jurisdiction caused by successive appeals from Paper Excellence and says that the transfer of shares is not applicable.

“Any movement in these processes during the suspension is null”, says the company in a note.

The group takes into account an article in the internal regulations of the Court of Justice of São Paulo, according to which “once a conflict of competence arises, the process will be suspended”.

When contacted, Paper Excellence did not respond until the publication of this report.

billionaire compensation

With the decision of the judge Franco Godoi, the arbitration process follows its course. With the transfer of 50% of Batista’s shares to Paper Excellence, the last phase of this process gains traction: the investigation of the alleged damage caused by the brothers to the Indonesian group.

People accompanying the discussions claim that the delay in delivering Eldorado caused losses of at least R$ 16 billion. Paper wanted to build a second pulp production unit in the country and, for almost two years, the project has been stalled.

Losses would be due to non-generated revenues and lost profits. If Paper is fully successful in the dispute, the Batistas will leave with nothing, as the compensation to be paid is greater than the amount received for the sale of shares.

Lula meets Joesley Batista and rival on trip to China

The Ministry of Agriculture invited rivals to be part of President Luiz Inácio Lula da Silva’s entourage to China. Joesley and Wesley Batista, owners of J&F, and Claudio Cotrim, president of Paper Excellence in Brazil, must meet;

The Batista brothers have already left for China on business. They had been barred from carrying out administrative activities at companies under the award-winning agreement for involvement in corruption cases, but were released in 2020 for resumption by the STJ.

Paper representatives follow on commercial flights. Cotrim embarks this Wednesday (22).