Provisions

12 Months Ended

Dec. 31, 2020

24. Provisions

The Group, as a result of the ordinary course of its business, may be a party to legal lawsuits of labor, commercial and tax nature. A provision is recognized whenever the loss is classified as probable.

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Financial guarantees and loan commitments: reflects the expected credit loss arising from financial guarantees issued, unused balances of checking account overdrafts, credit cards and other loan commitments.

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Provisions for reorganization: Consistent with the goal of further aligning the organizational structure with the corporate strategy during the current year, achieving efficiency gains and streamlining the decision-making process across all work teams.

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Other provisions: reflects the estimated amounts to pay class actions, labour, tax and commercial claims as well as other miscellaneous complaints.


	December 31, 2020		December 31, 2019
Other provisions		2,633,845		3,310,543
Provisions commercial claims		1,957,932		2,605,366
Provisions labor-related		250,904		278,001
Provisions tax claims		182,951		143,757
Others		242,058		283,419
Provisions for reorganization		2,029,162		2,690,285
Financial guarantees and loan commitments		1,364,594		1,233,260

TOTAL		6,027,601		7,234,088

Changes in fiscal year 2020 and 2019 are included below:


Accounts	Balances as of December 31, 2019		Increases		Provisions reversals			Provisions used			Inflation adjustment			Balances as of December 31, 2020
- Other provisions		3,310,543		1,124,419		(28,587	)		(742,649	)		(1,029,881	)		2,633,845
Provisions commercial claims		2,605,366		750,096		—			(630,636	)		(766,894	)		1,957,932
Provisions labor-related		278,001		139,933		—			(72,920	)		(94,110	)		250,904
Provisions tax claims		143,757		119,771		—			(26,773	)		(53,804	)		182,951
Others		283,419		114,619		(28,587	)		(12,320	)		(115,073	)		242,058
- Provisions for reorganization		2,690,285		2,858,723		(646,586	)		(2,328,094	)		(545,166	)		2,029,162
- Financial guarantees and loan commitments		1,233,260		537,694		—			—			(406,360	)		1,364,594

TOTAL PROVISIONS		7,234,088		4,520,836		(675,173	)		(3,070,743	)		(1,981,407	)		6,027,601


Accounts	Balances as of December 31, 2018		Increases		Provisions used			Balances as of December 31, 2019
- Other provisions		2,826,834		3,200,103		(2,716,394	)		3,310,543
Provisions commercial claims		2,251,611		2,648,272		(2,294,517	)		2,605,366
Provisions labor-related		354,470		175,162		(251,631	)		278,001
Provisions tax claims		146,001		92,895		(95,139	)		143,757
Others		74,752		283,774		(75,107	)		283,419
- Provisions for reorganization		—		3,188,547		(498,262	)		2,690,285
- Financial guarantees and loan commitments		750,442		482,866		(48	)		1,233,260

TOTAL PROVISIONS		3,577,276		6,871,516		(3,214,704	)		7,234,088

The expected terms to settle these obligations are as follows:


December 31, 2020
Provisions	Within 12 months		After 12 months
Other provisions		1,129,070		1,504,775
Provisions commercial claims		826,610		1,131,322
Provisions labor-related		78,737		172,167
Provisions tax claims		69,429		113,522
Others		154,294		87,764
Provisions for reorganization		2,029,162		—
Financial guarantees and loan commitments		1,364,594		—


December 31, 2019
Provisions	Within 12 months		After 12 months
Other provisions		1,215,982		2,094,561
Provisions commercial claims		873,356		1,732,010
Provisions labor-related		59,532		218,469
Provisions tax claims		44,703		99,054
Others		238,391		45,028
Provisions for reorganization		2,690,285		—
Financial guarantees and loan commitments		1,233,260		—

Possible contingencies

Contingent liabilities have not been recognized in these financial statements and corresponds to 105 claims received (both before the courts and the administrative authorities), arisen in the ordinary course of business.

he estimated amount of said claims amounts to 18,623 of which an outflow of funds is estimated for approximately 2,566 in the next 12 months. These claims are primarily related to leasing claims, petitions to secure evidence, and labor claims. The Group’s management and legal advisors consider that the probability that these cases would derive in an outflow of resources is possible, but not probable, and that the potential cash disbursements should not be material.