TelexFree's second attempt to declare bankruptcy failed in Espírito Santo, Brazil, after a panel of judges dismissed their appeal. This follows a similar rejection in an Acre court last September, where the company tried to access Ympactus' frozen funds. Ympactus' assets remain frozen under an existing injunction.

In the initial Acre case, TelexFree sought to use Ympactus' funds to cover Ympactus' debts, including returns owed to affiliate investors. Judge Braz Aristóteles dos Reis rejected the bankruptcy application. He found TelexFree and Ympactus were effectively the same company, sharing identical ownership and business models, and that the application served to circumvent the existing fund blockage. James Merril was listed as owner for both entities in official documents.

Brazilian law requires companies seeking bankruptcy protection to demonstrate over two years of active operation. Ympactus failed this requirement, with tax filings only dating back to 2012.

TelexFree presented similar arguments in their second appeal in Espírito Santo. They claimed Ympactus had been in business for two years. While Ympactus was registered in 2010, its initial purpose was to "market cosmetics, perfumery and toilet personnel."

The Acre bankruptcy hearing revealed Ympactus' earnings for September and October 2011 were R$63 ($28.63 USD) and R$21 ($9.54 USD) respectively. The judge considered these amounts insufficient to demonstrate "regular business operations" for the required two years.

Carlos Costa, James Merril, and Carlos Wanzeler repurposed Ympactus in March 2012 to front the TelexFree Ponzi scheme in Brazil. This March 2012 date falls less than two years before the company's effective shutdown in Brazil in June 2013.

Judges Lyrio Regis de Souza Lyrio, Janet Vargas Simões, and Annibal de Rezende Lima unanimously voted to dismiss TelexFree's appeal. They based their decision on the fact that Ympactus' contract with TelexFree was made less than two years prior to the relevant period.

Following this rejection, Carlos Costa declared on YouTube that he found the decision "strange."