Takeaway: The 1st Panel of the Brazilian Superior Court of Justice (STJ) held that a bank guarantee or surety insurance policy, when issued in the updated amount of the debt plus 30%, has the same legal effect as a cash deposit in non-tax enforcement proceedings. These instruments are sufficient to secure the claim and suspend the enforceability of the debt. Creditors may only reject such guarantees if they can prove that the guarantee is insufficient, formally defective, or otherwise unreliable.

The decision was issued in Special Appeal No. 2,007,865, which involved a health insurance provider that submitted a surety bond to suspend enforcement of a fine imposed by Brazil’s National Supplementary Health Agency (ANS).

According to the STJ, both bank guarantees and judicial surety bonds are valid means of ensuring that a debt will be paid at the end of an enforcement proceeding, as they can be liquidated into cash if necessary. The Court emphasized that these instruments strike an important balance. On one hand, they preserve the creditor’s right to efficient recovery. On the other, they uphold the debtor’s right to avoid undue hardship during the process. The Court also clarified that a fixed expiration date does not per se invalidate the guarantee. The adequacy of the instrument must be evaluated considering the rules issued by competent regulatory authorities.

This decision eases the burden on debtors in enforcement proceedings, as it allows the replacement of an immediate cash payment or asset attachment with alternative guarantees such as a bank guarantee or judicial surety bond. At the same time, creditors remain protected, as these alternative guarantees, when properly structured, have the same enforceability as a cash deposit. That said, attention to detail is essential: debtors must ensure that the guarantee complies with applicable legal and regulatory standards to avoid challenges from the creditor or court.

To access the full judgment (in Portuguese), click here.

At MAC Advogados, we have extensive experience advising clients on the structuring of judicial guarantees and strategic management of litigation in Brazil. Our team is ready to help you navigate complex enforcement proceedings with confidence and legal excellence.