Court reinforces protection for Grupo Safira and limits CCEE actions amid renegotiation process.
A São Paulo court has granted a new safeguard to Grupo Safira companies, suspending drastic measures such as contract terminations, early debt maturities, and penalties.
This expanded protection is intended to shield the group from financial consequences arising from its recent injunction to halt enforcement actions, the mediation process with creditors, or the non-fulfillment of obligations for which collection had already been judicially suspended.
The ruling, dated September 10, extends this restriction to the Electric Energy Commercialization Chamber (CCEE), preventing the entity from adopting new punitive measures against Safira Administração, Safira Artemis, Safira Trading, and Safira Varejo for the same reasons.
However, the companies’ request to be removed from the balanced operation regime was denied, and the regime remains active.
Strengthening Judicial Measures
This new court order complements a previous injunction from August 31, which had already suspended enforcement actions against the companies, the collection of credits under mediation, and asset seizures for 60 days.
At that time, the judicial review considered financial reports that indicated a deterioration in results and a decrease in the companies’ cash flow, evidencing liabilities of R$ 357.5 million.
In response to the initial decision, the companies filed motions for clarification, arguing that the court had not specifically addressed protection against terminations, early maturities, and penalties resulting from the injunction and mediation.
They also reiterated their request for safeguards against the CCEE and removal from the balanced operation regime. The judge partially granted the motions, acknowledging the omission and issuing the new decision.
The expanded protection now also covers the effects of terminations already communicated after the start of the judicial process, provided they were motivated by the pursuit of legal protection, mediation, or the non-payment of obligations already under suspension.
The intention is to prevent the pursuit of legal solutions and collective negotiations from becoming triggers for contract dissolution, which would undermine the protection granted. However, terminations or other actions due to contractual breaches unrelated to the judicial protection remain possible.
Balanced Operation and the CCEE
On September 1, the CCEE announced the inclusion of the four Grupo Safira companies in the balanced operation regime. This regime affects the accounting and settlement of operations, requiring contingency procedures and conditioning sales contracts to the existence of corresponding purchases or generation.
The CCEE opposed the companies’ removal from the regime, describing it as a prudential control mechanism to prevent negative exposure and ensure the liquidity of the Short-Term Market (MCP), rather than a penalty.
The companies maintained authorization to register and adjust operations, provided they remained within the balancing rules.
The judge, upon reviewing the request, did not find sufficient grounds to override the CCEE‘s assessment, considering that immediate removal from the regime could compromise the prior control of operations and expose other market agents to risks.
Nevertheless, during the term of the injunction, the CCEE is prohibited from applying new penalties, demanding additional collateral, aggravating operational restrictions, preventing contract registrations, or initiating the disconnection of the companies, provided such actions are directly linked to the injunction, the mediation, or the non-payment of already protected obligations.
The CCEE may, however, take action regarding new, specific, and individualized situations unrelated to the judicial protection. Normal balanced operation procedures remain valid, and the decision does not suspend current obligations nor does it authorize the companies to operate without backing or outside the regulatory requirements.
When contacted, the CCEE highlighted the importance of maintaining the regularity of the balanced operation:
recognized as a prudential mechanism that prevents negative exposure and the transfer of losses to other market agents. In this way, the decision upholds sector rules and protects the CCEE‘s role regarding current obligations and multilateral settlement.
