Asset Seizure vs Surety Bond
Understand how to offer a judicial surety bond in court to avoid the seizure of assets (penhora) — what the Brazilian Civil Procedure Code says (art. 835, §2), when the judge accepts it, how much it costs, and how to preserve the company's cash and assets.
Instead of having assets seized (penhora) to secure a debt in court, a debtor can offer a judicial surety bond (Brazilian Civil Procedure Code, art. 835, §2) — it has the same securing effect as a cash deposit, avoids blocking assets and cash, and frees working capital, subject to the judge's acceptance.
Key facts
- What asset seizure is: It is the judicial act that seizes and blocks the debtor's assets, cash, or rights to secure the enforcement of a debt.
- Legal alternative: The Civil Procedure Code (art. 835, §2) treats the surety bond as equivalent to a cash deposit to secure enforcement.
- Impact on cash: Asset seizure blocks assets and cash; the surety bond keeps cash and assets free to operate.
- Judicial acceptance: The surety bond is accepted to replace the seizure or deposit, subject to the judge's assessment.
- Typical cost: The rate depends on the applicant's (principal's) risk and financial capacity, ranging around 0.5% to 5% per year.
Side-by-side comparison
| Criterion | Seizure / block | Surety bond |
|---|---|---|
| Blocks assets/cash | Yes, seizes assets and cash | No, cash and assets stay free |
| Consumes bank credit line | Not applicable (blocks the asset directly) | Does not consume the bank line |
| Cost | Loss of liquidity and use of assets | ~0.5% to 5% per year (per applicant risk) |
| Judicial acceptance | Default rule of enforcement | Accepted (CPC, art. 835, §2), subject to the judge |
| Operational impact | High — locks working capital and operations | Low — preserves working capital |
What asset seizure (penhora) is
Asset seizure (penhora) is the judicial act by which the court seizes and blocks the debtor's assets, cash, or rights to secure the payment of a debt in an enforcement proceeding. It is the traditional way of ensuring that, at the end of the case, there is enough property to pay the creditor.
In practice, seizure can reach account balances (through judicial blocking), vehicles, real estate, inventory, revenue, and other assets. The immediate effect is a loss of liquidity: the asset or cash is no longer available to the company, even before a final decision on the merits of the debt.
For an operating company, this is often more harmful than the disputed amount itself — seizing cash or inventory can lock up working capital, jeopardize payroll, and paralyze operations while the case is pending.
The surety bond as an alternative (CPC 835 §2)
The judicial surety bond is a policy issued by an insurer authorized by Susep, in which the insurer guarantees to the court the amount at stake in the enforcement. The Brazilian Civil Procedure Code, in art. 835, §2, treats the surety bond (and the bank guarantee) as equivalent to a cash deposit for the purpose of securing enforcement.
This means that, instead of having assets seized or tying up money in a judicial deposit, the debtor can offer a surety bond policy with the same securing effect. The creditor remains protected by the policy amount, and the company keeps its cash and assets free to operate.
Besides preserving working capital, the surety bond is usually issued quickly and has a predictable cost. ERGO specializes in judicial surety bonds and structures the policy according to the amount and the enforcement procedure.
Asset seizure vs surety bond
The central difference is what gets blocked. In a seizure, the company's own property is taken — cash, real estate, vehicles, inventory — and leaves its control for as long as the case lasts. With a surety bond, none of the property is blocked: the guarantee becomes the insurer's policy.
From the perspective of the creditor and the court, the effect is equivalent: there is a sound guarantee that the amount will be paid in the end. From the company's perspective, the difference is enormous — the surety bond frees working capital, avoids blocking cash, and keeps productive assets in operation.
For that reason, when it is possible to replace the seizure with a surety bond, this is usually the more efficient option: the company meets the guarantee requirement without sacrificing liquidity or halting its activity.
How to offer the bond in court
The first step is to obtain the judicial surety bond policy for the amount required by the enforcement. The insurer performs a risk analysis of the applicant and issues the policy naming the court as beneficiary and the specific case as the object of the guarantee.
With the policy in hand, the lawyer files a motion in the case requesting the replacement of the seizure (or deposit) with the surety bond, based on art. 835, §2, of the Civil Procedure Code. It is up to the judge to assess the soundness of the guarantee and decide on the replacement.
Note: as a rule the policy amount tracks the updated debt, and some courts require an add-on (commonly 30%) to cover charges and adjustment. ERGO advises on the correct sizing to maximize the chance of acceptance and avoid rejections for insufficiency.
Frequently asked questions
Can I replace the asset seizure with a surety bond?
Yes. The Civil Procedure Code (art. 835, §2) treats the surety bond as equivalent to a cash deposit, allowing you to petition the court to replace the seizure with a judicial surety bond policy. The company preserves its assets and cash, and the creditor keeps the guarantee of the disputed amount.
Is the judge required to accept it?
Not automatically. The Code gives the surety bond the same effect as a cash deposit, but it is up to the judge to assess the soundness and sufficiency of the guarantee in the specific case. A well-sized policy, in the correct amount and with an adequate term, greatly increases the likelihood of acceptance.
Does it work for tax enforcement?
Yes. The surety bond can be used to secure tax enforcement (execução fiscal), replacing the seizure and allowing the debt to be disputed without blocking the company's cash. As the tax procedure has particularities, it is worth detailing the case — see the guide on surety bonds for tax enforcement.
Do I need the extra 30%?
It depends on the court. Many cases require the guarantee to cover the debt plus a percentage (commonly 30%) for charges and adjustment; others accept the updated debt amount. That is why the policy sizing must consider the specific requirement of the case.
How much does it cost?
The cost is a rate on the guaranteed amount and depends on the applicant's risk and financial capacity, ranging around 0.5% to 5% per year. It is usually far lower than the cost of having cash or assets blocked by a seizure throughout the entire case.
Does it release assets already seized?
Yes, you can request the replacement of a seizure already in place with a surety bond. Once the policy is obtained, the lawyer petitions for the replacement based on art. 835, §2, of the Civil Procedure Code, and, if granted by the judge, the previously seized assets are released.
Need to avoid asset seizure without locking up your cash?
ERGO issues judicial surety bonds to replace seizure and deposit in enforcement — preserving your cash and assets.