Disney Licensor Accused of Fraud in Brazil

One of Disney’s largest school products licensors in Latin America, the Dermiwil group is fighting a family squabble for bankruptcy protection as it goes through its worst financial crisis in nearly 60 years.

Businessman Alexandre Esteves Ruiz, a minority partner, accuses his brothers Dércio, Rogério and Daniela, who run the Ruiz family holding, of alleged fraud.

For Alexandre, the group acts in “bad faith in proposing judicial reorganization” for committing three alleged frauds: sales of products without invoices and with receipts in unreported accounts; omission of assets; and irregular sales of goods. The group denies irregularities (see below for details).

The process has been in the 3rd Court of Bankruptcy and Judicial Reorganizations since July 17 in São Paulo.

The case is analyzed by Judge Clarissa Somesom Tauk, who – after an expert examination – will decide whether to accept the reorganization of Dermiwil along the lines presented by the group or to accept Alexandre’s requests, who requests the breaking of the brothers’ bank secrecy and the appointment of an intervenor in the company to conduct the crisis.

Financial problems

Founded in 1962, in São Paulo, the Dermiwil group has become, over the decades, the leader in sales of Disney licensed school products, now employing 115 people, a number that was already 700.

The group says it is experiencing a crisis due to three factors: the advance of pirated Chinese products with the characters, the non-renewal of bank credits due to conflicts with Alexandre Ruiz and the drop in sales in the covid-19 pandemic. The group owes R$ 55 million to 272 creditors.

“The sum of all these factors brought consequences to the cash and finances, so that their indebtedness increased drastically”, says the group in the request for judicial recovery.

alleged frauds

Partner Alexandre Ruiz seeks to prove alleged parallel operations with open checking accounts in the name of companies in the group that would have received dollars from abroad.

In one of them, at Santander bank, on August 4 this year, US$ 1.4 million (R$ 7.4 million) was deposited by BLE Sak Investments Corp, registered in Panama. The company would belong to the brothers Dércio and Daniela Ruiz.

“It is fully proven that the company has a parallel financial structure with cash 2 invoicing and products without undeclared invoices. Such accounts move millions of reais and were not related,” says attorney Anderson Albuquerque, from Albuquerque e Alvarenga, who represents Alexander.

Also in the process are alleged deposits in the accounts of Dermiwil employees relating to sales of products in the market.

Alexandre also claims that a court investigation pointed out the non-compliance with the Judicial Reorganization Law.

Group denies fraud

In note to the UOL, Dercio Ruiz, commercial director of the holding, says that “the allegations of alleged fraud are another desperate attempt by Alexandre Ruiz to defame the group”.

Dercio says that Alexandre left the administration in 2018 after alleged frauds committed by him in the administration. He denied the existence of any illegal remittance of money abroad, saying that he did not squander his assets or carry out any parallel operations.

“The Dermiwil Group vehemently denies the existence of the frauds pointed out by Alexandre Ruiz.

Alexandre’s defense denies that she left the company due to irregularity. According to his lawyer, the businessman “left the administration due to a shareholder agreement” and “Dercio’s allegations are slanderous, there is none and there has never been any proof in this regard”.

Justice can accept recovery, says expert

According to Marcelo Godke, a specialist in business and corporate law, the recovery is requested by companies in a situation of financial crisis to avoid their closure.

He explains that the Judicial Reorganization Law imposes rules that companies must comply with. However, there is jurisprudence that relaxes the requirements.

“Increasingly, the judiciary understands that it is more important to save the company than to let it die, even not observing all the criteria”, informs the professor. But he says companies cannot omit goods.

“All assets must be brought in because, if bankruptcy is subsequently declared, those assets will be liquidated collectively. Creditors step forward to receive part of the equity.”