[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN PORTUGAL] 67
principle, must be paid by the Insolvency Administrator when they fall due. Once the judgment declaring the insolvency has become final and the creditors’ meeting for the distribution report has been held, the Insolvency Administrator promptly proceeds with the negotiation and sale of the assets. And has the duty to present, within 10 days of that meeting, a liquidation plan for the sale of the assets, containing defined time goals and a list of the concrete steps to be taken. The failure to present or the seriously culpable failure to comply with the liquidation plan constitutes just cause for the dismissal of the insolvency administrator. The purchasers acquire the assets f ree and clear of claims and liabilities. However, the CIRE establishes a set of rights for guaranteed creditors: • The guaranteed creditor shall be heard regarding the sale's mode and shall also be informed about the initial base value or price of the proposed sale to a certain entity. However, the Insolvency Administrator is not bound to accept the secured creditor’s position; • The guaranteed creditor may propose to purchase the asset, either directly or through a third party, for a price higher than the projected sale price or the initial base value. If such proposal is not accepted by the Insolvency Administrator and the asset is sold at a lower price, the Insolvency Administrator is required to guarantee that the guaranteed creditor is in the situation he would be in if the asset had been sold at the proposed price; • The proceeds of the sale of assets shall revert immediately to the guaranteed creditors, before any payment is made to any other creditor. Once insolvency proceedings have commenced, transactions that unfairly favor one creditor over the others or any acts that reduce, make it more
difficult or impossible, jeopardize or delay payment to the creditors can be set aside by the insolvency administrator. Two requirements must be fulfilled: the acts must have been carried out in bad faith (with the knowledge of the debtor’s insolvency or o f the damage that act could cause) and within the two years prior to the initiation of the insolvency proceedings. The insolvency administrator can terminate contracts that fulfil these criteria by means of a registered letter within six months as of the knowledge of their existence. The termination has retroactive effects. The insolvent debtor or the third party which received the communication of termination can challenge it, filing a judicial action within three months after receiving the communication. One of the biggest novelties of Law 9/2022, of 11 January, is the introduction of compulsory partial distribution of amounts to creditors, whenever, cumulatively: a) The decision declaring the insolvency has become final and the process has continued for liquidation of assets; (b) the time limit for contesting the list of recognized creditors has expired without any contestation having been filed, or, if a contestation has been filed, the contestation in question has already been decided, whether for lack of response to the contestation or by a court decision which may not be final; c) The amounts deposited to the order of the insolvent estate are equal to or greater than EUR 10,000.00 and their ownership is not disputed; d) The process is not in a condition to prepare the final distribution. Once these conditions are met, the insolvency administrator shall prepare and publish the partial distribution list, and the creditors and the creditors (if any) shall have 15 days to reply to it. At the end of this period, the process is
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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