[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN PORTUGAL] 74
It is also provided the peremptory nature of the deadline for the opening of the insolvency filing, allowing, however, its extension (which cannot exceed six months from the beginning of the deadline), upon motivated request of the insolvency administrator or of any interested party. The suspension of the proceedings in the event of death of one of the proponents affected by the classification of the insolvency is established, opening the door to the to the deduction of a habilitation incident in the general terms of the civil procedural law. II.3. EFFECTS ON DEBTORS A declaration of insolvency transfers the power to run a company from its directors to an Insolvency Administrator, who becomes the representative of the debtor for all purposes. Management bodies of a debtor may continue to operate (when requested by the debtor, if the insolvency is voluntary, or with the agreement of the creditors), but actions that might be carried out by the debtor that breach any required supervision of the Insolvency Administrator may be declared null and void. A declaration of insolvency implies that all debts of the insolvent become immediately due. Any judicial proceedings involving patrimonial matters, where the final result may affect the value of the insolvent company’s estate, are attached to the insolvency proceeding provided that the Insolvency Administrator requests it. A declaration of insolvency stays (and may then terminate) any pending enforcement proceedings and creditors cannot initiate new enforcement proceedings against the debtor. II.4. EFFECTS ON NATURAL PERSONS If the debtor is a natural person, at the debtor’s request, he may be granted exoneration from insolvency claims which are not fully paid during the insolvency proceedings or in the three years
following closure, as provided for in Articles 235 to 248 of CIRE. The exoneration of a natural person’s liabilities, if allowed, will require the disposable income earned by a debtor to be assigned to a trustee chosen by the court for the five years following the closure of the insolvency proceedings (assignment period). At the end of each year during the assignment period, the trustee uses the sums received: a) to pay outstanding costs of the insolvency proceedings; b) to reimburse the body responsible for the financial and property management of the Ministry of Justice for the remuneration and expenses of the insolvency practitioner and the trustee as incurred by that body; c) to pay his own remuneration and expenses; d) to distribute the remainder among the insolvency creditors pursuant to the provisions laid down on payment to creditors in insolvency proceedings. On the other hand, the judge is allowed to extend the assignment period, up to a maximum of three years, upon the reasoned request of the debtor, a creditor in the insolvency, the insolvency administrator (if still in office) or the trustee who was charged with supervising the debtor's compliance with its obligations. If the judge concludes that there is a serious likelihood of the debtor's compliance with the obligations imposed on him by law, he shall order an extension. Provision is made for the possibility of a supervening liquidation, once the liquidation of the insolvent's assets has already been completed and the insolvency proceedings are closed. It will now be possible, during the assignment period, for the trustee to seize and sell assets that were also part of the debtor's assets and, subsequently, to allocate the proceeds of the sale to the creditors, in the same manner as the disposable income.
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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