[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN PORTUGAL] 61
KEY FACTS OF BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS UNDER PORTUGUESE LAW
I. INTRODUCTION OF PORTUGUESE LAW - DEFINITION OF INSOLVENCY AND LEGAL FRAMEWORK – KEY ASPECTS Insolvency proceedings consist of a universal enforcement process, with the objective of satisfying creditors in the best possible way in an bankruptcy scenario, either by an insolvency plan based on the recovery of the company via the insolvency assets, or, when this is not possible, by liquidating the debtor's assets and sharing its result among the creditors. Insolvency proceedings in Portugal are only triggered in the case of a debtor’s insolvency, which is defined, in general, as the inability of the debtor to fulfill its obligations as they fall due (cash flow criteria). Aside from this, and in the case of legal entities, the debtor is also considered to be in an insolvency situation when, according to accounting criteria, the liabilities of the debtor clearly exceed its assets (balance sheet criteria). Under Portuguese Law, the most relevant laws and statutory regimes that apply to the financial restructuring, reorganizations, liquidations, and insolvencies are the following: • Insolvency and Recovery Code (" Código da Insolvência e da Recuperação de Empresas " – hereinafter “CIRE”), approved by the Decree - Law No. 53/2004, dated 18.03.2004 and last amended at 25.08.2022 by the Decree-Law No. 57/2022, on recovery and insolvency judicial proceedings, including the Special Revitalization Proceedings (“ Processo Especial de Revitalização – hereinafter “PER”; • Civil Code (“ Código Civil ”) approved by the Decree-Law No. 47344, dated 25.11.1966 and last amended on 17.08.2023;
• Commercial Companies Code (" Código das Sociedades Comerciais "), approved by the Decree-Law No. 262/86, dated 02.09.1986 and last amended on 11.01.2022 on dissolution and liquidation of commercial companies; • Extra-Judicial Regime for Corporate Recovery (“RERE”), approved by Law no. 8/2018, of March 2nd, providing a specific legal regime for out-of-court recovery agreements; • Statute of the Insolvency Administrator (" Estatuto do Administrador de Insolvência "), approved by the Law No. 22/2013, dated on 26.02.2013 and last amended at 11.01.2022 by the Law No. 9/2022; • Law of the Companies of Insolvency Administrators (" Regime Jurídico das Sociedades de Administradores da Insolvência "), approved by the Decree-Law No. 54/2004, dated 18.03.2004; • Directive (EU) 2019/1023 of the European Parliament and of the Council, of June 20th, 2019, on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt; • Law No. 9/2022 was published on 11 January 2022. This new law establishes measures to support and speed up corporate restructuring processes and payment agreements. It is the result of the incorporation into Portuguese law of Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 (“Directive (EU) 2019/1023”). Furthermore, it amends the Insolvency and Corporate Recovery Code (“CIRE”), the Companies Code
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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