Insolvency 2022

Last Updated November 22, 2022


Law and Practice


Sérvulo & Associados (SÉRVULO) is a Portuguese full-service law firm established more than 20 years ago, with more than 100 lawyers providing legal services in all relevant practice areas and sectors/industries. SÉRVULO is a member of three international networks of law firms (Legalink, Cathay Associates and Roxin Alliance), which enables it to provide comprehensive legal advice to clients on a truly global scale. SÉRVULO is also a founding member of the multilateral network of partnerships SÉRVULO LATITUDE⦵, formed by leading law firms from the full range of Portuguese-speaking countries, spanning four continents (Africa, America, Asia and Europe). In the restructuring and insolvency field, SÉRVULO has a multidisciplinary team, comprising around 20 dedicated lawyers from its finance and governance and litigation and arbitration departments, which has advised clients on some of the most complex and high-profile cases in Portugal and Europe in this area (eg, the liquidation procedures of BES, BANIF and BPP banks).

General State of the Market

After a period of significant increase in insolvency and restructuring proceedings, during 2007 and 2012, mostly caused by the financial crisis of 2007–2008 and then impacted by the effects of the Troika intervention in Portugal, as well as the application of resolution measures to two credit institutions – BES and Banif (whose judicial liquidation procedures are currently ongoing) – as from 2015 until 2020 a decrease in said proceedings was observed.

However, as from 2021 an upward trend in the number of insolvency and restructuring proceedings occurs again, linked to a combination of factors mainly related to the impact of COVID-19 on the economy worldwide, the end of extraordinary legal and economic incentive measures adopted within the pandemic context (direct and indirect measures, notably credit moratoriums, state-guaranteed loans, subsidies to firm continuation, tax and social contribution deferrals and tax collection suspensions), and certainly by the conflict in Ukraine.

Indeed, the number of insolvency and restructuring filings during the second quarter of 2021 amounted to 2,444 and increased to 2,699 in the comparable period in 2022 (14.6% increase). The number of businesses declared insolvent reached a peak during May 2022.

Most Impacted Sectors

The main sectors affected, in a trend similar to last year, were: manufacturing (21.5%); wholesale and retail trade and vehicle repair (21.5%); hotels and restaurants (14.4%); and construction (11%). Most of the companies declared insolvent are based in the largest cities, such as Lisbon, Porto, Braga, Aveiro and Leiria. 

Due to their economic relevance, it is worth pointing out two insolvency proceedings initiated in 2021: Groundforce (the leading ground handling provider in Portugal) and Zmar (in the tourism sector).


According to published official information, the average court costs incurred in insolvency/restructuring proceedings amount to an average value of EUR2,434.73.


The average duration of insolvency proceedings up to the judicial declaration of insolvency in the second quarter of each year (with a marked downward trend between 2007 and 2022) went from nine months in the second quarter of 2007 to one month in the same period of 2022.

However, if all the procedural phases of insolvency proceedings are taken into consideration, the average duration of said proceedings increased significantly, from 42 months in the second quarter of 2007 to 73 months in the comparable period of 2022.

Expected Developments

The impact of the international scene and the aftermath of COVID-19

COVID-19 caused, in 2020 and again in 2021, an impact with many consequences still to be assessed, and just as the economy was progressively recovering from those adverse effects and adapting to work in a post-pandemic environment, those consequences were significantly amplified by the conflict in Ukraine. In fact, said conflict has led to a complex global energy crisis, rise of commodity prices and of interest rates, supply chain disruptions, inflation, and a significant cost-of-living increase. All these factors combined have been deeply impacting individuals, economic activity and financial markets worldwide.

Given that an economic downturn invariably translates into an increase in the number of insolvency and restructuring proceedings, the Portuguese government has approved a series of measures to mitigate these harmful effects by hindering the usual consequences of an economic slowdown (redundancies and defaults). This is known as the Portuguese Recovery and Resilience Plan (in the amount of EUR16.6 billion in both non-repayable support and loans from the Recovery and Resilience Facility or RRF).

Although the first quarter results were encouraging, there are a considerable number of factors, mostly related to the effects of the ongoing war in Ukraine mentioned above, that make it likely that a very different future lies ahead. The present crisis on a global scale, combined with the termination of the extraordinary measures adopted during the pandemic, are causing an increase in insolvencies of between 15% and 20%, both for individuals and companies. The number of insolvencies is expected to increase significantly.

Transposition of Directive (EU) 2019/1023

The transposition of Directive (EU) 2019/1023 finally took place through Law No 9/2022 of 11 January, which introduced several relevant changes in the Insolvency and Recovery Code (Decree-Law No 53/2004), with two subsequent amendments, with a significant part of those changes dealing with the legal regime of the special revitalisation proceeding ("PER"), both substantive and procedural.

The transposition comprises the following key points:

  • changes regarding the ranking of creditors and clarification regarding the classification of claims as subordinated, and regarding special related persons;
  • changes as to the contents of the restructuring plan and the judgment of (non-)approval;
  • amendments as to the majority required for approval of the restructuring and of the insolvency plan;
  • funding incentives;
  • clarification as to the nature of compensatory labour claims within the insolvency proceeding;
  • extension of the insolvency administrator's (IA’s) responsibilities, thereby simplifying the proceeding and enhancing its efficiency, particularly regarding the ranking of the creditors’ claims;
  • adjustments concerning the mandatory partial distributions (rateios parciais obrigatórios), which must be done upon the fulfilment of certain criteria and when a final distribution is not yet possible;
  • implementation of measures to enhance the accessibility of preventative restructuring proceedings and pre-insolvency workouts;
  • significant adjustments to the regime on discharge of debt (exoneração do passivo restante), to ensure the debtors (who are natural persons) a second opportunity; and
  • extension of the scope of application of the early warning mechanism (created by Decree-Law 47/2019, of 11 April 2019), to ensure that companies are aware of the insolvency risks associated with their economic situation.

On the one hand, the implementation of such measures will most certainly foster more efficient and swifter insolvency proceedings and reduce the cascade effect caused by companies’ insolvencies on the market. On the other hand, it will also create alternatives to companies in a situation of economic distress or imminent insolvency, which may have as an effect a significant reduction in the number of insolvency proceedings commencing each year. In brief, these measures may compensate for the adverse effects of the present crisis on companies’ economic situation.

Within the Portuguese jurisdiction, the most relevant statutes governing financial restructurings, reorganisations, liquidations and insolvencies of business entities are the following:

  • the Insolvency and Recovery Code (Código da Insolvência e da Recuperação de Empresas or CIRE) (Decree-Law No 53/2004);
  • the Extraordinary Procedure for Company Viability (Processo Extraordinário de Viabilização de Empresas or PEVE) (Law No 75/2020), which establishes an urgent, temporary and extraordinary procedure (which may be used until 30 June 2023) aimed at companies in a recoverable situation of economic distress resulting from the COVID-19 pandemic;
  • the Extra-Judicial Regime for Corporate Recovery (Regime Extrajudicial de Recuperação de Empresas or RERE) (Law No 8/2018), which provides a specific legal regime for out-of-court recovery agreements;
  • the Regulation (EU) 2015/848 of the European Parliament and of the Council, of 20 May 2015, on insolvency proceedings, which establishes co-ordination mechanisms and rules on conflicts of law for cross-border transactions; and
  • the Directive (EU) 2019/1023 of the European Parliament and of the Council, of 20 June 2019.

In addition, note should be taken of the rules on voluntary dissolution and liquidation of companies, and on directors’ duties relevant within insolvency/restructuring procedures established by the Companies Code, as well as some specific regimes applicable in certain sectors, particularly financial.

Voluntary Proceedings

Portuguese law provides for three types of statutory restructuring proceedings: the PER and the PEVE (both requiring court intervention) and the RERE (which is an out-of-court restructuring proceeding). All of these proceedings are voluntary (although PEVE is a temporary and extraordinary restructuring proceeding), requiring the debtor’s initiative, as well as the engagement of (some) creditors.

Insolvency proceedings may also be voluntary, if initiated by the debtor (who may have a duty to do so).

Involuntary Proceedings

Under Portuguese law, the only involuntary proceeding is insolvency since it may be commenced, regardless of the debtor’s initiative, through the intervention of its creditors, the Public Prosecutor's Department or any person liable for the debt.

Mandatory Initiation of Insolvency Proceedings

Directors are required to file a request with the court for the declaration of the company’s insolvency within 30 days of the date on which they acknowledge (or should have become aware of) the insolvency situation.

The COVID-19 pandemic outbreak and its negative economic effects motivated the suspension of said obligation, which was an exceptional and transitory measure approved within the pandemic environment.

Presently, it is not clear whether this suspension is still in force, and if the obligation to file for insolvency within 30 days has been reinstated or not, given that no legal diploma has expressly revoked it (which happened in other situations, with legal diplomas expressly revoking other legal rules specifically approved in the pandemic context), and there appears to be no case law regarding this topic. However, considering that the Portuguese government did not extend the period of the exceptional situation of alert due to COVID-19, which terminated on 30 September 2022, and repealed several legal diplomas, deciding that they were outdated due to the end of the pandemic, it may be construed that the suspension of the obligation to file for insolvency has also become outdated and thus is no longer in force.

Failure to Initiate Mandatory Insolvency Proceedings

If the request to initiate insolvency proceedings is not timely presented, serious wilful misconduct by the legal or de facto directors is presumed (although such a presumption may be rebutted). Consequently, the insolvency may be qualified as aggravated/culpable.

Involuntary proceedings, which may be initiated regardless of the debtor’s intervention, may be initiated by the creditors, the Public Prosecutor's Department or any person liable for the debt in the events foreseen in Article 20 of the CIRE. These events evidence the debtor’s insolvency (eg, failure to comply with payment obligations, abandonment of facilities, or rushed or ruinous disposition of assets).


Creditors allowed to initiate insolvency proceedings may do so regardless of the nature of their credit and may be conditional creditors.

Public Prosecutor's Department

The Public Prosecutor's Department may initiate proceedings while representing entities whose interests it is legally obliged to protect (eg, the tax authorities and social security office).


The entity/person requesting the commencement of the insolvency proceeding must submit a petition to the court in which it:

  • alleges the fulfilment of the requirements set forth in Article 20 of the CIRE;
  • justifies the origin, nature and value of the claim;
  • files all the elements regarding the debtor’s assets and liabilities; and
  • indicates means of evidence (including witnesses).

Concept of Insolvency

Insolvency is defined as the inability of the debtor to fulfil its obligations as they fall due (cash flow test) or a situation where, according to accounting criteria, the liabilities of the debtor clearly exceed its assets (balance sheet test).

Insolvency as a Requirement for Initiating Proceedings

The debtor’s insolvency, or imminent insolvency, is required only to initiate the insolvency proceedings (voluntary or involuntary). By contrast, a PER may only be initiated where the debtor is not insolvent. As for the PEVE, it may be commenced by companies which had more assets than liabilities on 31 December 2019, and which are currently in a recoverable situation of economic distress, imminent insolvency or insolvency due to COVID-19.

Given the systemic importance of the financial and insurance sectors and the need to protect depositors/insurance takers and beneficiaries, which/who are typically consumers, these are subject to specific statutory insolvency/restructuring regimes.

Banking Sector

The General Regime for Credit Institutions and Financial Companies (Decree-Law No 298/92) sets out a specific regime for recovery and resolution planning, early intervention and the resolution of credit institutions. It confers the regulatory authorities (either the European Central Bank or the Bank of Portugal) with the power to impose:

  • remedial measures (eg, a restructuring plan or the appointment of a supervisory board or a statutory auditor);
  • intermediary measures (eg, the appointment of a provisional management board); or
  • resolution measures, provided for cases of particularly serious financial turmoil (eg, disposal of the activity to a third party or internal capitalisation).

Additionally, Decree-Law No 199/2006, which transposes Directive 2001/24/CE, sets out a specific regime for the voluntary and compulsory liquidation of credit institutions, financial companies, payment institutions and e-money institutions, by:

  • establishing co-ordination measures among EU member states (eg, recognition of decisions concerning intervention measures imposed by regulatory authorities);
  • solving issues relating to conflicts of law in the context of liquidation within the EU; and
  • conferring the Bank of Portugal with the power to revoke these companies’ authorisations and to intervene in the liquidation process.

Insurance Sector

Law No 147/2015 sets out a specific regime applicable to the recovery of insurance and reinsurance companies. This regime sets out a range of prevention measures to be applied where there is a risk of financial deterioration, and which confers on the supervision authority (Autoridade de Supervisão de Seguros e Fundos de Pensões or ASF) the power to impose specific measures (eg, modifications to the share capital and closing of businesses) and to authorise, intervene in and supervise the liquidation of these companies. Insurance claims are preferential claims, and are specially protected throughout liquidation proceedings.

The View of the Market

Creditors (particularly banks) and debtors favour out-of-court restructuring proceedings over statutory proceedings involving the intervention of the courts and the appointment of an office holder because they:

  • maintain secrecy regarding the debtor’s distressed financial conditions, thus avoiding “bad press” prejudicial to the company’s image and allowing the regular continuation of the business;
  • secure greater value for creditors, by maximising the potential for credit recovery and preventing costs (eg, judicial expenses and remuneration of the insolvency administrator); and
  • allow them to keep control over the company’s activity.

However, with the introduction of the PER in 2012, informal restructurings came to lose relevance. The PER allows creditors to reach an agreement with the same level of legal certainty as a judicial proceeding, through the employment of a swift, simple and transparent process that enables the cram-down of dissenting creditors. The beneficial tax regime applicable to the PER and the advantageous treatment of the new money provided within this proceeding have also contributed to the shift of the market from informal restructuring to the PER. The PEVE has similar advantages, with the benefit of being a faster proceeding. Nevertheless, the PEVE has not been frequently used, probably due to its stricter requirements.

Statutory and Consensual Restructuring Proceedings

This view of the market has been translated into lawmakers’ attitudes towards facilitation and promotion of out-of-court restructurings. Indeed, these may occur either within pure, informal and "de-judicialised" negotiations and agreements, or within a proceeding following the RERE.

Despite these intentions, the RERE is not widely used in the market because it brings few advantages when compared to both pure informal consensual restructuring and the PER, especially considering that the RERE does not allow for a cramming-down of the creditors who do not engage in the negotiations. For this reason, the RERE is not discussed herein.

The time and proceedings depend on the debtor's size, the seriousness of the situation and the number and type of creditors involved.

Process and Timings

The negotiations are informally carried out, with no appointment of committees, although each party appoints its representatives and attorneys.

Simple restructurings are usually concluded within three to four months, and more complex restructurings in eight to 12 months.

The Position of the Creditor

Creditors do not generally accept any compromise on the suspension or limitation of their rights (eg, enforcement rights), but, in practice, they refrain from exercising such rights while negotiations are ongoing.

Creditors generally require full disclosure during negotiations (typically regarding accounts, assets and the business of the debtor). In more complex restructurings, creditors sometimes require an audit and a viability plan set up by specialised entities.

Debtor’s Undertakings

Besides the usual undertakings present in finance agreements (eg, negative pledge clauses, limitation on indebtedness), the creditors naturally require greater control over the debtor's activity in a restructuring scenario. Therefore, the agreement usually imposes on the debtor more stringent information obligations and consent requirements applicable to changes in the articles of association, members of the corporate bodies, and the capital structure. Moreover, a controller is frequently appointed by the creditors to monitor the execution of the agreement.

Typical Outcome of Negotiations

Restructuring agreements typically include solutions such as:

  • restructuring of the payments schedule (eg, periods of grace, extension of repayment dates and decrease of interest rates);
  • datio in solutum (transfer in lieu of payment);
  • sale of assets;
  • reduction in activity; and
  • increased compromise by the owners.

However, it is not common for creditors to accept changes in their relative positions or to subordinate their claims to those of other creditors.

In out-of-court restructuring proceedings, new money may be injected by the creditors taking part in the negotiations or by the debtor’s owners, in accordance with the provisions of the restructuring agreement.

New Money Provided by Creditors

The injection usually takes the form of new loans or facilities, in which each creditor participates in proportion to its claim. The debtor (or its owners) grants security over free assets or assets already encumbered in favour of the same creditors (second charge).

Although it is not common, it would not be unusual for trade creditors to extend payment facilities regarding the supply of assets/goods required for the debtor to continue operating its business.

New Money Provided by Owners

Creditors may require the debtors’ owners to provide new money in the form of a share capital increase, supplementary share capital or a shareholders’ loan. New money provided by the owners is not secured.


Creditors and debtors cannot create a priority structure that differs from the one provided for in the law.

Principle of Good Faith

Creditors are subject to the general principle of good faith while negotiating and performing the restructuring agreement. Among other aspects, this principle requires creditors to disclose information, keep negotiations secret, communicate clearly and act loyally.

Specific Duties in the Context of RERE

Ministers’ Resolution 43/2011 defines a set of guiding principles applicable in the context of the RERE (eg, co-ordination and disclosure duties among creditors and the obligation to refrain from acting against the debtor).

Inability to Cram Down Dissenting Creditors

Out-of-court restructuring agreements only bind the signatory parties; they cannot be imposed on, or modify, any rights of non-subscribers. Where cramming down is necessary, creditors may negotiate an out-of-court revitalisation plan with the debtor and subsequently initiate a formal judicial proceeding (the PER or PEVE) to execute it. However, this alternative is feasible only if the plan is endorsed by a certain majority of creditors and ratified by the court under the PER or PEVE.

Majority Requirements in Credit Agreements

Credit agreements with multiple lenders typically require amendments to be in writing and unanimously approved by the lenders. Consequently, renegotiations – especially in the context of a workout – require the support of all lenders, and mechanisms to bind dissenting lenders are not usually available.

The Redundancy of the Cram-Down Feature

Although cram-down is not available in out-of-court restructurings, these agreements are not perceived as unworkable since:

  • certain solutions adopted do not require such a feature (eg, changes in the shareholding structure or composition of management bodies, new money or security provided by owners); and
  • the capital structure of many debtors relies almost exclusively on bank loans and, given that banks are repeat players in the restructuring market, there may be an incentive to swiftly and successfully reach an agreement.

Mortgages and Pledges

Creditors can take security over real estate and movable property subject to public registration (cars, boats and aeroplanes) through mortgages, created through public deeds, which are subject to public registration.

Movable property that is not subject to public registration (eg, intellectual property, shares, bank accounts and financial instruments) is commonly used as security through the creation of a pledge.

Mortgages and pledges confer on the creditors the right to be paid ahead of common creditors up to the value of the mortgaged/pledged property belonging to the debtor or a third party.

Retention of Title

Retention of title is mostly used by trade creditors and suppliers, allowing them to maintain title over goods supplied until the debt is fully discharged. Retention of title is also commonly used to take security over vehicles, because it can be publicly registered.

Financial Collateral

Financial instruments and cash in bank accounts can be provided by a borrower to a lender under a financial collateral arrangement that benefits from special treatment upon the insolvency of the debtor.

Enforceability of Liens/Security

Secured creditors will, in principle, be able to enforce their liens/security in a restructuring/insolvency process, and will not be allowed to enforce such rights outside that process.

Intercreditor Covenants

As a rule, intercreditor covenants will not limit the enforceability or the discretion of secured creditors in restructuring or insolvency scenarios, even if the breach of such covenants can trigger bilateral claims between creditors.

How Secured Creditors Block Insolvency Plans

Any creditor can challenge a formal restructuring/insolvency plan by claiming that the end result will be less favourable for its interests when compared with the hypothetical absence of such a plan. As a result, secured creditors can block restructuring and insolvency plans that do not give them privileged distribution when compared to a no-plan scenario.

Stay in Security Enforcement

Secured creditors are subject to a general stay in formal insolvency/restructuring proceedings, which is automatically triggered by the judicial decision declaring the insolvency, or appointing a provisional officer for the debtor, respectively.

Secured creditors are involved in the general insolvency proceeding since the assets comprising their security form part of the insolvency estate. However, they are treated in a special category for insolvency law purposes, to the extent that they hold a security in rem or a special statutory security.

In particular, in addition to the right to be paid ahead of other creditors from the proceeds of the sale of the secured asset, they are entitled to several special rights, namely, interest due to these creditors is not treated as a subordinated claim up to the value of the secured asset and they receive compensation for damages emerging from the delay in the sale of the assets subject to security, unless such delay is attributable to them.

Priority Waterfall

Within an insolvency proceeding, the creditors’ priority waterfall is as follows:

  • secured creditors holding security in rem will be paid in advance of other secured creditors, from the proceeds of the sale of the assets subject to the security;
  • other secured creditors (eg, creditors benefiting from general statutory security) will be paid in advance of unsecured creditors, and pro rata within the same category;
  • unsecured creditors; and
  • subordinated creditors.

Rights of Each Class of Creditor

Each class of creditor has the right to be paid in accordance with the priority waterfall above.

Additionally, some specific types of creditors within some classes benefit from special treatment. For instance, tax and social security credits may not be reduced, an employee representative has a seat on the creditors’ committee, and creditors whose claims are grounded on shareholder loans may not request the insolvency of the debtor.

In the context of the PER, if certain requirements are met, creditors can be classified into different categories according to the nature of their claims (secured, privileged, common or subordinated) and may be identified according to the existence of sufficient common interests.

It is generally accepted that the debtor can keep trade creditors whole during a restructuring process, at its discretion, to the extent that the goods and services provided are essential for the preservation of its economic activity or the value of its assets.

Additionally, essential common services cannot be withheld from the debtor during the PER (water, electricity, electronic communications, etc) and/or any other services without which the company cannot carry out its business. The cost of these services will be qualified as credits over the insolvency estate if the debtor is declared insolvent within two years and will, therefore, be paid ahead of secured creditors.

The most relevant right attributed to unsecured creditors is the right to vote in proportion to the value of their credits.

This right is especially relevant on the occasion of the approval of the insolvency/restructuring plan, which requires a qualified majority vote, and of the replacement of the official liquidator in an insolvency context allowing unsecured creditors to influence the outcome of these proceedings.

Precautionary Measures within Insolvency Proceedings

On its own initiative, or upon a request from a creditor, the insolvency court may adopt precautionary measures to avoid any detriment to the financial status of the debtor, (eg, appointment of a temporary insolvency administrator) before the insolvency declaration.

Precautionary Measures outside Insolvency Proceedings

Aside from this and prior to the initiation of an insolvency/restructuring proceeding, under Portuguese law, creditors fearing that the debtor may cause irreparable damages to their rights may petition the court to take the measures necessary to protect their rights (eg, freezing the debtor's assets).

Notice to the Debtor

Precautionary measures can be issued before the debtor is notified, in cases of urgency.

Debts of the Insolvency Estate

Administration expenses and fees charged by the insolvency administrator are considered credits over the insolvency estate and have priority over all secured claims.

Tax and Employee Claims

Some tax and social security claims benefit from statutory securities and will rank above unsecured credits; their exact position in the waterfall will depend on the special/general nature of the statutory security attached to the tax claim.

Employees can also benefit from a statutory security, but may rank below creditors benefiting from security in rem.

New Money in the Context of a PER

Creditors who finance the activity of the company within the PER or within the execution of the recovery plan (interim financing), have a credit over the insolvent estate up to an amount corresponding to 25% of the unsubordinated debt, if the company becomes insolvent in the two years following the res judicata of the ratification of said recovery plan.

For the part exceeding the 25% referred to above, credits resulting from financing benefit from general movable credit privilege, graduated before the general movable credit privilege granted to employees. This privilege now extends to credits resulting from interim financing granted by creditors, partners, shareholders and any other persons specifically related to the company.

It is forbidden to challenge financing acts, as well as to declare them null and void or unenforceable. Civil, administrative or criminal liability on the grounds that the financing is detrimental to all the creditors is excluded, except in cases expressly set out in the law.

As noted in 2.2 Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receivership, the PER, the PEVE and the RERE are the statutory restructuring proceedings under Portuguese law. Given the reduced importance of the RERE, the focus of this section will be the PER and the PEVE.


Purpose of the PER

The PER is a special proceeding for companies facing a recoverable situation of imminent insolvency or economic distress, and it is not to be used as a substitute for insolvency proceedings. Instead, it aims to allow a company to engage in negotiations with its creditors towards its revitalisation.

Overview of the process

It is initiated by a written request subscribed to by the debtor and creditors representing at least 10% of non-subordinated credit (or a lower percentage in certain limited cases), expressing their willingness to engage in negotiations, which include the following:

  • a declaration by the company of its ability to recover;
  • a declaration by a certified accountant attesting that the company is not insolvent;
  • ancillary documents required in insolvency proceedings; and
  • a proposal for a recovery plan, with a description of the company’s situation in terms of assets, financing and revenue cash flows.

Where the debtor qualifies as a large company, it must also file a proposal for the classification of creditors affected by the restructuring plan into distinct categories, according to the nature of their respective claims. It must also classify these creditors according to the existence of sufficient common interests in order to reflect the range of the company's creditors (eg, employees, shareholders, bank entities, suppliers of goods and services, and public creditors).

Upon receipt of this request, the court’s order appointing a provisional judicial administrator (PA) is published on the official web platform CITIUS, formally initiating the PER.

Subsequently, the creditors must lodge their credit claims to the PA, who drafts and publishes a provisional list of creditors on the CITIUS platform. This list may be challenged by the creditors before the court.

With the publication of the appointment of the PA, the standstill period (four months, extendable for one month) is initiated, as referred to below.

Once the deadline to challenge the list has passed, out-of-court negotiations between the creditors and the debtor, under the PA’s supervision, can begin. These last for two months, extendable once for one month, if the legal assumptions are met.

Role of the court

The court rules on the challenges to the provisional creditors' list and once this is approved by the creditors, the court renders a ruling of ratification/non-ratification of the recovery plan.

The recent amendments to the CIRE have made judicial scrutiny of the recovery plan more stringent and demanding, as follows. The court is expected to:

  • confirm if the recovery plan provides for the equitable treatment of creditors and categories of creditors affected, regardless of any creditors' opposition to the plan;
  • determine modification of the list where it does not reflect the universe of the company's creditors or the existence of sufficient common interests among them;
  • determine if new financing to the company fairly aligns with the interests of the creditors;
  • ensure the viability of the plan, providing it offers reasonable prospects of avoiding the company's insolvency; and
  • order an evaluation of the company by an expert (if a creditor expresses non-approval of the plan).

The recovery plan – approval, ratification and potential challenges

The plan’s approval requires a vote of the company’s creditors. The CIRE foresees three systems of obtaining the approval majority (in all referred systems, abstentions are not considered).

Under the first system, the plan may be approved by the favourable vote of more than two thirds of the total votes issued in each of the categories of creditors.

The second system foresees the approval of the plan which, having been voted on by creditors whose claims represent at least one third of the claims listed with voting rights, obtains the favourable vote of (i) more than two thirds of the total votes issued, and (ii) more than 50% of the votes issued corresponding to non-subordinated claims listed with voting rights.

According to the third system, the plan is approved if it cumulatively collects the favourable vote (i) of creditors whose credits represent more than 50% of the total credits with voting rights, and (ii) of more than 50% of the issued votes corresponding to non-subordinated credits with voting rights.

The ratification (or non-ratification) of the recovery plan may be challenged in accordance with the assumptions provided for in the CIRE.

Upon the ratification of the recovery plan, the debtor and all creditors (including non-voting creditors and creditors that have not claimed or have contingent claims regarding facts that occurred on or prior to the PA’s appointment) are bound by its terms, which may include a cram-down of the credits and/or the restructuring of repayment conditions, the provision of collateral and the transfer of assets to creditors.

If the recovery plan is not approved and the PA declares before the court that the company is insolvent, it may: (i) lodge an opposition, following which the judge will order the PER to be closed with all its effects extinguished; or (ii) not oppose it, in which case, insolvency is declared and proceedings are initiated (being the PER proceedings attached to the document).

Where the PER is extinguished, the debtor cannot initiate a new PER for the next two years.


The PER is usually concluded within six to eight months.

A faster track

Alternatively, the PER may follow a shorter form, being initiated by the submission of a pre-negotiated extrajudicial recovery plan signed by the debtor and creditors representing the majorities foreseen in the CIRE to approve the plan, with all ancillary documents. In such cases, following the PA’s appointment and the notification of non-subscriber creditors for opposition to the provisional creditors list, the judge decides on the plan’s ratification as described above.

These shorter proceedings are usually concluded (upon the final ratification decision) within two to four months.

Absence of confidentiality

These proceedings are not confidential, being available for consultation by interested parties. The main decisions regarding the proceedings are made public.


Purpose of the PEVE

The PEVE is an ad hoc urgent public proceeding, aimed at companies which have found themselves to be in a difficult economic situation or in an imminent or current situation of insolvency as a result of the COVID-19 pandemic, but which can still be made economically viable.

Overview of the process

It is initiated with the voluntary submission of an application by the company, with the competent court to declare insolvency, together with the following elements:

  • a written declaration signed by the company's board of directors proving that the current economic situation of the company is a result of the COVID-19 pandemic and that the company meets all the necessary conditions for viability;
  • a copy of the documents proving the company’s difficult economic situation;
  • a list of creditors; and
  • a viability agreement, signed by the company and creditors representing the same majorities mentioned above with regard to the approval of a recovery plan in a PER.

Upon the receipt of this request a provisional judicial administrator (PA) is appointed and there is a 15-day period during which creditors may challenge the list of creditors presented by the debtor or request the non-approval of the viability agreement. The court has a ten-day period to decide on said claims and on the approval or non-approval of the agreement. Therefore, the court plays a similar role in the PER and in the PEVE.


The limited statistical data available shows the PEVE is concluded in up to three months.

The PER and the PEVE

The PEVE and the PER have many similarities, as the commencement of either of them:

  • suspends any insolvency proceeding commenced against the debtor;
  • suspends the enforcement proceedings pending against the debtor and precludes creditors from initiating new enforcement proceedings;
  • narrows the debtor’s rights on asset disposition, as in both proceedings, the company cannot perform acts of special importance without the prior written authorisation of the PA; and
  • forbids the withholding of essential common services from the debtor, among others.

Effect in Claims Against the Company

The standstill period is now four months, extendable for one month. The standstill period begins with the order appointing the PA and does not allow for the inclusion of declaratory actions within the scope of this rule. The exception to the standstill period is only found in enforcement actions for the collection of labour credits, thus protecting the rights of workers.

A contractual clause which gives the request to open a PER, the request for an extension of the standstill period, or the granting thereof the value of a resolutive condition of the business, or which grants the opposing party a right to indemnity, termination or rescission of the contract, is now null and void.

Effects on the Company’s Activity and Management

The company may continue to operate its business, under the PA’s supervision. The PA’s prior written authorisation is required for "acts of special importance" (ie, any act that may materially impact the company's viability or the creditors’ rights, such as the sale of the business or relevant assets, acquisition of property, conclusion of long-term agreements, assumption of liabilities and provision of collateral). Without the PA’s approval, said transactions have no effect.

New Borrowing

The company may borrow money during recovery proceedings. Such credits benefit from a statutory right of lien as described in 5.5 Priority Claims in Restructuring and Insolvency Proceedings under the heading "New Money in the Context of a PER".

During a PER, the different categories of creditors negotiate and vote the restructuring plan.

Classes of Creditors

As referred to in 5.1 Differing Rights and Priorities, the waterfall of credits sets out the criteria by which creditors will, in principle, be paid. It is also important to bear in mind the different categories of creditors. Thus, it is common, within the PER, for the PA to hold meetings with the most important creditors (eg, those necessary to form the majority required to approve the plan) according to the relevant criteria.

Organisation and Representation of Creditors

There is no requirement for a creditors’ committee under the PER but, according to Ministers’ Resolution 43/2011, creditors may appoint one or more representatives (not necessarily lawyers) to negotiate with the debtor.

Disclosure of Information

Creditors are provided with the same documents required for an insolvency proceeding, which include, inter alia:

  • the accounts of the company;
  • its shareholding structure;
  • a list of major creditors;
  • the recovery plan; and
  • a list of the members of corporate bodies.

Creditors may also request, from the PA or the debtor, any relevant information to assess the financial situation, the terms of the plan and their relative position vis-à-vis other creditors, to enable an assessment of their situation should the debtor be declared insolvent and liquidated.


The guiding principles set forth in Ministers’ Resolution 43/2011 concerning co-ordination and disclosure duties imposed on creditors are applicable in the context of the negotiation of both a PER or a PEVE.

Cram-Down of Dissenting Creditors

Claims of dissenting creditors may be modified without their consent if the recovery plan is approved by the required majority and ratified by the court.


Dissenting creditors may oppose such ratification by showing that creditors were not treated equally or were in a “creditors worse off” situation.

Credits may be traded during the PER.

The PA receives notice of the transfer and defines/updates the list of creditors accordingly. The PA may require additional information to ascertain the authenticity of the transfer.

Upon the request of the PA, or on the court’s own motion, a PER or a PEVE concerning companies in a control or group relationship may be joined. In such cases, the same PA may be appointed over both.

Portuguese law does not impose special restrictions on the company’s use of its assets. Despite this, the recovery plan may establish limitations (eg, creditors’ authorisations).

Moreover, the company is required to refrain from acting in a way that could negatively affect the creditors’ rights, guarantees and repayment prospects, or in any other way that is detrimental to the value of its assets.

In addition, where use of the assets amounts to an "act of special importance" (eg, the long-term lease of an asset), the prior authorisation of the PA is required.

General Description

During the PER, the company may dispose of an asset within the normal operation of its business.

Where such a disposition is an act of special importance, it is subject to the PA’s prior written authorisation. In the absence of this authorisation, the sale has no effect. In particular, the sale of any of the following is qualified as such:

  • the business itself;
  • any asset that is required to ensure the maintenance of the business activity;
  • interests held in other companies;
  • real estate; or
  • any asset exceeding 10% of the value of the total assets of the company.

Sale’s Execution

A sale of assets or a business is executed by the company’s management unless otherwise determined by the court.

The Position of the Purchaser

The purchaser acquires good title, although liens and encumbrances over the assets remain effective, unless they are cancelled by the secured creditor. The risk of annulment of these sales in later insolvency proceedings is mitigated if they are authorised by the PA and/or provided for in the recovery plan approved by the creditors.

The Creditors’ Position

Creditors may bid for assets being sold. Although the debtor and the PA are not bound to give preference to creditors, it is prudent to consult the creditors for this purpose. Hence, the sale in market conditions is reassured, and the risk of later annulment becomes less likely.

Pre-negotiated Sales

Sales and similar transactions negotiated prior to the PER may be executed during the proceeding, subject to the PA’s authorisation, in cases of special importance.

Creditor liens and security arrangements may be released or affected by an explicit statement in the recovery plan, subject to the equal treatment of creditors, and provided no creditor is worse off.

New money required for the continuation of the business may be secured with liens/security. Both the agreement to accept new money and its liens are immune to annulment in the case of a subsequent insolvency declaration. These investments/loans may be secured by assets of the company, even if such assets are encumbered by pre-existing secured creditor liens/security, although the original creditor benefits from priority in the enforcement of that security. Moreover, the CIRE grants new money creditors a statutory right of lien over all the debtor’s current assets, ranked above the right of lien granted to employees, which is extended to the PER and the PEVE.

Within the PER, the value of each claim is determined in the list of creditors prepared by the PA, which may be challenged by the creditors. In such cases, the value is determined by the court.

The plan may limit/reduce/affect credits, but will not modify or terminate agreements without the consent of the counterparty.

The PER does not release co-debtors or guarantors. Moreover, these co-debtors/guarantors, upon being subrogated in the original creditor’s position, may not demand a higher amount from the debtor than the amount resulting from the recovery plan.

During the PER, the exercise of set-off rights by creditors is a matter of controversy, especially whether such set-off rights are subject to general civil law rules or insolvency's more restrictive provisions. Moreover, having been admitted, set-off is always subject to the prior authorisation of the PA if it qualifies as an act of special importance. With the increasing use of the PEVE, the same controversy may arise for this proceeding.

The company fails to comply with the recovery plan if it defaults for more than 15 days as of receiving written notice from the creditor, in which case, a moratorium or waiver provided for in the plan ceases to be effective. Thus, the creditor may request the company’s insolvency.

The recovery plan does not, in general, change the company’s ownership structure, and existing equity owners usually retain their interest in the company.

Equity owners should be the first to bear the losses of the company in a situation of financial distress; therefore, it is unusual for them to receive any dividends, or any other payment, from the company while the plan is in force.

The Purposes of Insolvency

The main purpose of an insolvency proceeding is the satisfaction of creditors’ claims, primarily through the recovery of the business integrated in the insolvency estate or, where recovery is not possible, through the liquidation of the insolvency assets and the distribution of the proceeds among the creditors. To a certain extent, the CIRE is flexible in allowing creditors to opt for either alternative.

Initiating Insolvency Proceedings

Insolvency proceedings usually commence via the lodging of an application in court presented by the debtor, the creditors or the Public Prosecutor's Department, together with documentation evidencing the insolvency situation.

The application lodged by a creditor must include information regarding the nature and amount of the credit, the identification of the debtor’s managers (both in fact and law) and its five biggest creditors (not including the applicant), and the debtor’s commercial registry certificate. If the applicant is the debtor, then it is important to indicate whether the company’s situation of insolvency is current or imminent, and to include the documents set out in Article 24 of the CIRE, such as a list of all known creditors and a clear explanation of the company's activity over the last three years.

Creditors’ Claims

The court’s decision declaring the insolvency of the debtor grants creditors (and the Public Prosecutor's Department) a maximum of 30 days to claim their credits (including conditional credits) before the insolvency administrator (IA). Creditors must lodge their claims together with several elements evidencing the existence of the credit, its origin, classification (ie, secured or privileged), due date, and accrued interest. Credits recognised in a previous court decision must also be claimed within the insolvency proceeding.

Recognition of Credits

Within 15 days as of the end of the credit claim period, the IA prepares and publishes a list of recognised credits and respective terms and conditions (eg, identification of the creditor, nature of the credit, amount and accrued interest, and the existence of guarantees/security), as well as a list identifying the credits that were not recognised (including the motives for non-recognition).

Within ten days as of the deadline for the IA to present these lists, any person with a legal interest can challenge the list of recognised creditors through a request lodged before the court based on the unlawful inclusion or exclusion, or on the inaccuracy of the amount or classification of the recognised credits. The court will then render a decision concerning the existence and correct classification of the credits. Recognition and/or ranking of credits that require evidence will be provisionally decided by the court.

Outside this period, it is still possible for a creditor to request the recognition of a credit and the separation or restitution of assets within the insolvency proceeding. The separation request is made against the insolvent estate, the creditors and the debtor at any time until the end of the insolvency proceeding. The claim for the recognition of credits can only be filed until the latest of the following deadlines:

  • within six months following the final judgment declaring the insolvency (res judicata); or
  • within three months as of the constitution of the credit.

Trading of Claims

These credits may be traded among creditors and with third parties prior to, or even throughout, the insolvency proceedings (but this may prevent set-off against debts of the insolvency estate).

Attachment and Stays on Judicial Proceedings

All pending judicial proceedings regarding the insolvency estate assets filed against the debtor or even third parties, which may determine variations in the value of the insolvency estate, and all judicial proceedings with an exclusive patrimonial nature filed by the debtor, are attached to the insolvency proceeding if the IA so requests, on the grounds of convenience, considering the purpose of the proceeding.

Enforcement proceedings or other measures requested by the insolvency creditors that affect the insolvency estate, as well as arbitration disputes, will be suspended.

Effects on the Management Powers

The declaration of insolvency immediately removes the directors’ powers and transfers to the IA the power of administration of the assets belonging to the insolvency estate.

Occasionally, the court may rule that management bodies keep control over the company’s business (usually without retribution), provided that:

  • the debtor has requested to retain control of its business;
  • the debtor presents an adequate restructuring plan;
  • there is no expected disadvantage for the creditors or for the insolvency proceedings; and
  • the person or legal entity who initiated the insolvency proceedings agrees with the debtor’s request.

Effects on Contracts

The rules regarding the effects of the declaration of insolvency over pending contracts are mandatory; thus, contractual clauses contravening or revoking them are void.

As a rule of thumb, contracts entered into between the debtor and a creditor that have not yet been completely performed are suspended until the IA decides on their performance or non-performance. The creditor may determine a reasonable date before which the IA must issue this decision. If no decision is made by this date, it is presumed that the IA has decided not to perform the contract. Note, however, that special rules apply to some contracts (eg, indivisible obligations, sale with ownership reservation and similar contracts, sale without delivery, promissory contracts, forward transactions, leases, mandates and management contracts).

Credits emerging from contracts that the IA decided not to suspend are generally debts over the insolvency estate, and rank above most other credits.


Following the declaration of insolvency, creditors may set-off their credits against debts of the insolvency estate if at least one of the following requirements is fulfilled:

  • the legal requisites (in particular, reciprocity) of set-off are verified prior to the date of the declaration of insolvency; and/or
  • the credit/claim and counterclaim concern money or another fungible of the same type and quality asset, and the claim is judicially enforceable.

However, set-off is not legally acceptable where:

  • the debt was incurred after the declaration of insolvency, in particular as a result of the annulment of acts for the benefit of the insolvent estate;
  • the insolvency creditor acquired their claim from another, after the declaration of insolvency;
  • the insolvency estate is not responsible for the debts of the insolvent; and
  • the claim to be set-off is subordinated.

Information Available to Creditors

Insolvency proceedings are public. Information is constantly being analysed and put forward to all involved parties. In particular, creditors have the right to be presented with a report prepared by the IA at the creditors’ meeting. This report contains an analysis of information about the debtor (including accounting information), and the IA’s opinion about the prospect of maintenance of the debtor’s business and whether an insolvency plan should be approved.

Distributions to Creditors

Creditors are paid with the proceeds of the sale of the assets belonging to the insolvency estate. These proceeds are used, at first instance, to pay the insolvency estate debts (notably liquidation expenses) and only the remaining part pays the credits in accordance with the amounts and ranking determined in the list of recognised creditors and decided by the court. Invariably, the proceeds are not sufficient to fully pay the recognised credits; thus, creditors are paid pro rata within each class.

Interim payments are available once there is a final decision on the credits’ ranking and value, and are currently mandatory in certain circumstances.

The sale of the assets belonging to the estate is a competence of the IA. Sales qualified as acts of special importance are subject to approval by the creditors’ committee.

Once the insolvency declaration is final and the assessment report has been approved by the creditors’ meeting, the IA promptly starts negotiating the sale of the assets.

The purchasers acquire the assets free and clear of claims and liabilities.

Secured creditors have a set of rights relating to the sale of the assets, which include:

  • the right to be heard in relation to the proposed sale terms and conditions (including the price);
  • the right to propose to purchase the asset for a higher price;
  • where the insolvency administrator refuses this proposal, the right to be in the situation the secured creditor would be in if the asset had been sold at the proposed price; and
  • the right to be paid with the proceeds of the sale before any payment is made to other creditors.

It is possible to execute pre-negotiated sale transactions after the commencement of an insolvency proceeding, provided that such transactions are approved by the IA.

Creditors are organised in a creditors' meeting and a creditors’ committee.

The Creditors' Meeting

Creditors' meetings are general assemblies of creditors composed of all the creditors that decide on certain aspects of the insolvency process where the consent of the creditors is legally required (eg, for the appointment of the insolvency administration and approval of the insolvency plan).

Creditors have the right to attend the meeting, which is presided over and convened by the judge and, unless otherwise determined by law, decisions are adopted by the majority of issued votes, without a quorum. As a rule, the credits are conferred with one vote per euro. Subordinated creditors are not entitled to vote, except to adopt the insolvency plan, and the judge decides on the votes conferred to conditional and litigious credits.

The Creditors' Committee

Prior to the first creditors' meeting, the court appoints a committee of creditors composed of three or five members (plus two substitutes), with the chair position preferably being attributed to the company's largest creditor. The choice of creditors' committee members ensures adequate representation of the various classes of creditors, except for subordinate creditors.

The committee is mainly responsible for assisting, and overseeing the activity of, the IA. In performing its duties, the committee may freely examine the debtor's accounts and request any information and documents it deems necessary from the IA. The members of the creditors' committee are not remunerated, but they are reimbursed for any expenses strictly necessary for the performance of their duties.

The creditors' committee is not a mandatory body.

Within the EU

The effects of restructuring or insolvency proceedings opened in EU member states (excluding Denmark) are automatically recognised in, and not reviewed by the courts of, all other member states, under Regulation (EU) 2015/848 (principle of mutual trust). This rule applies unless the effects of this recognition manifestly infringe the member state’s public policy (eg, when it is contrary to the member state's fundamental principles, constitutional rights or individual liberties).

Third Countries

Decisions rendered in proceedings opened in third countries are recognised in Portugal, after revision and confirmation by a Portuguese court, which verifies that the foreign court/authority’s competence is based on the place where the debtor is domiciled or has its main interests, or an equivalent rule, and that the recognition will not bring about a result that offends the basic principles of Portuguese jurisdiction. This rule applies to insolvency declarations and all related decisions.

As per the information available, no protocols or other arrangements have been entered into with foreign courts to co-ordinate cross-border proceedings.

However, within the EU, Regulation (EU) 2015/848 establishes some co-ordination mechanisms, namely, concerning cases where main and secondary insolvency proceedings in relation to the same debtor co-exist, which may occur when the debtor has an establishment within the territory of a member state other than the one where the insolvency proceeding was initiated. These mechanisms consist basically in duties of co-operation and information between the courts and between the courts and insolvency practitioners.

Within the EU

Under Regulation (EU) 2015/848, cross-border insolvency and recovery proceedings are opened where debtors have their main centre of interest (the place where the debtor regularly conducts the administration of its interests in a way ascertainable to third parties) or an establishment. The Regulation determines, as a rule, that the proceedings are governed by the law of the member state where they were initiated.

Third Countries

The determination of the law governing cross-border insolvency and recovery proceedings regarding debtors of third countries follows the CIRE, which establishes, as a general rule, that proceedings and corresponding effects will be governed by the law of the country where they were initiated.

Under insolvency or restructuring proceedings, foreign creditors are dealt with in the same way as Portuguese creditors, except for particular matters. The most relevant difference concerns the rules regarding creditors’ notification.

Within the EU

As mentioned in 8.1 Recognition or Relief in Connection with Overseas Proceedings, under the principle of mutual trust and the Regulation (EU) 2015/848, any ruling opening insolvency proceedings handed down by a court of a member state which has jurisdiction (excluding Denmark) will be recognised in Portugal from the moment that it becomes effective in the State of the opening of the proceeding.

This means the rulings adopted by member states’ courts (excluding Denmark)are enforceable in Portugal without any previous revision or confirmation by the national courts.

In spite of this, it may be necessary to present a request in court for the purpose of the registration of the foreign declaration of insolvency in the Portuguese Land Registry and Insolvency Register.

In any case, said rulings produce the same effects in Portugal as under the law of the State of the opening of proceedings.

However, the aforementioned general rules do not apply in the following cases:

  • when the effects of the recognition are clearly incompatible with Portuguese public policy (eg, the fundamental principles, constitutional rights and individual liberties);
  • in the cases where Regulation (EU) 2015/848 provides otherwise (eg, the effects of the insolvency proceeding on the rights of a debtor over immovable property, a ship or an aircraft subject to registration in a public register will be determined by the law of the member state under the authority of which the register is kept); and
  • if a secondary insolvency proceeding has been commenced in Portugal, in accordance with Article 3, (2) and Article 20, (2) of the Regulation (in this case, the effects of the said secondary proceeding cannot be challenged in other member states, but any restriction of creditors' rights will only produce effects vis-à-vis assets located within the territory of another member state in the case of those creditors who have given their consent).

Third Countries

Rulings adopted by courts of third countries are recognised and enforced in Portugal upon revision and confirmation by a Portuguese court.

Said recognition depends on the fulfilment of a set of requirements laid down in the CIRE, namely:

  • the foreign court’s competence will be based on the place where the debtor is domiciled or the centre of its main interests, or an equivalent rule; and
  • the ruling recognition cannot bring about a result that offends the basic principles of the Portuguese legal framework.

On this basis, national case law tends to reject, for instance, the recognition of foreign rulings resulting in the expropriation of private property with no compensation to the owner.

After its recognition, the foreign ruling is publicised together with the foreign IA’s appointment decision and the decision on the closing of the proceeding, which are both subject to registration, notably in the Portuguese Land Registry. After recognition, the foreign decisions rendered within a foreign insolvency proceeding may be enforced in Portugal.

Under Portuguese law, the statutory officer appointed for conducting recovery or insolvency proceedings is designated as the “judicial administrator” and its rights and duties are governed by Law No 22/2013. The judicial administrator is designated as the “provisional judicial administrator” in the PER, and as the “insolvency administrator” in the insolvency proceeding.

Provisional Judicial Administrator (PA)

The PA is responsible for:

  • providing for the conservation and productivity of the debtor’s estate;
  • ensuring the continuation of the company’s operation;
  • avoiding, if possible, the deterioration of the economic situation of the company;
  • assisting the debtor in managing its estate; and
  • specifying the actions that the debtor is still empowered to undertake.

Insolvency Administrator (IA)

The IA’s functions include:

  • the liquidation of assets of the insolvent and payment of its debts;
  • maintaining and exploring the rights of the insolvent and maintaining the exploitation of the company business;
  • managing and disposing of assets integrated into the insolvency estate;
  • representing the insolvent in all patrimonial-related subjects relevant to the insolvency, and in judicial proceedings concerning the insolvent or assets belonging to the insolvency estate;
  • deciding whether to terminate contracts unperformed on the date of the declaration of insolvency; and
  • annulling acts detrimental to the insolvency estate (“clawback actions”).


The PA and the IA report to the court and to the creditors’ committee and are liable for damages caused to creditors through negligent non-compliance with their duties.

Appointment of the Judicial Administrator

The court appoints the judicial administrator (the PA or the IA) and may take the name indicated in the insolvency request into account when making its decision.

Replacement of the Judicial Administrator

The judicial administrator appointed by the court may be replaced by another person/entity elected by the insolvent’s creditors, unless the court has concerns over the putative replacement's reputation or the possibility of retribution being sought by the creditors.

Interaction with the Debtor’s Management

Whenever the administration of the insolvent estate is entrusted to the debtor, the judicial administrator supervises it, authorising or rejecting certain actions.

Who Can Serve as Judicial Administrator?

The judicial administrator must usually be registered in the insolvency administrators’ official list and must fulfil certain requirements.

Attorneys are prevented from serving as judicial administrators, as provided for in the statutes of the Portuguese Bar Association. However, the statutes of the Certified Accountants Association do not prevent accountants from serving as judicial administrators, unless a conflict of interests resulting in a lack of independence or impartiality arises.


Company directors have a duty to request the opening of insolvency proceedings.

Additionally, both company and insolvency law impose duties on directors aimed at protecting the creditors’ interests, even before an insolvency situation.

A qualified standard of care applies to directors: the diligence of a careful and organised manager.

Liability Regime

Two different liability regimes apply in an insolvency context.

Under the company law regime, directors are personally and jointly liable vis-à-vis creditors if the company becomes insolvent as a consequence of the breach of provisions aimed at protecting creditors’ interests.

Insolvency law liability will apply when the insolvency has been created or deepened as a consequence of wilful or grossly negligent acts or omissions on the part of the directors (including de facto and shadow directors) in the three years preceding the opening of the insolvency proceeding.

Duties Vis-à-Vis Subsidiaries and Shareholders

Directors owe general duties of loyalty, information and protection to company affiliates and subsidiaries.

Directors are liable vis-à-vis owners/shareholders both for damages caused to shareholders and for damages resulting from the deterioration of the company’s value emerging from acts or omissions carried out while in office. The direct liability of directors vis-à-vis owners/shareholders is seldom applied.


In insolvency proceedings, the conduct of the debtor’s directors (over the previous three years of the opening of the insolvency proceeding) will be assessed to determine whether they have wilfully, or with serious misconduct, created or contributed to the insolvency or to its deepening. In this case, the directors may, inter alia, be prohibited from managing third-party assets and from engaging in commercial activities or holding positions on the boards of companies and similar entities for two to ten years.

Criminal sanctions may also apply in special circumstances of gross negligence, wilful conduct or fraud.

Claims asserting the breach of duties owed by the directors to creditors (based on company or insolvency law) are launched exclusively by the IA.

Transactions executed before the beginning of the insolvency proceedings that diminish, hinder, obstruct, jeopardise or delay the satisfaction of insolvency creditors may be annulled and/or terminated and the assets returned to the insolvent estate, provided that the counterparty acted in bad faith (ie, was aware of the insolvency or its imminence).

Bad faith is presumed in the case of transactions between related parties. Specific transactions (eg, agreements with no consideration for the insolvent, the repayment of obligations not yet due, the encumbrance of assets to secure pre-existing obligations, or the reimbursement of shareholders’ contributions in the year before the beginning of the insolvency proceedings) may be annulled and/or terminated, regardless of bad faith, except for special situations where the law always requires the proof of bad faith or other conditions.

The look-back period is two years before the onset of the insolvency proceedings.

The IA annuls transactions by sending notice to the relevant counterparty, within six months of the acknowledgement of the transaction, but no later than two years after the insolvency declaration.

Sérvulo & Associados

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Trends and Developments


PLMJ is a law firm based in Portugal that combines a full service with bespoke legal craftsmanship. For more than 50 years, the firm has taken an innovative and creative approach to produce tailor-made solutions to effectively defend the interests of its clients. The firm supports its clients in all areas of the law, often with multidisciplinary teams, and always acting as a business partner in the most strategic decision-making processes. With the aim of being close to its clients, the firm created PLMJ Colab, its collaborative network of law firms spread across Portugal and other countries with which it has cultural and strategic ties. PLMJ Colab makes the best use of resources and provides a concerted response to the international challenges of its clients, wherever they are. International collaboration is ensured through firms specialising in the legal systems and local cultures of Angola, China/Macao, Guinea-Bissau, Mozambique, São Tome and Príncipe and Timor-Leste. The firm would like to thank Ricardo Silva Pereira and João Tiago Morais Antunes for their contributions.

Changes to the Insolvency and Corporate Recovery Code

Law 9/2022 was published in the Portuguese official gazette on 11 January 2022 and entered into force on 11 April 2022. This 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 (the “Directive (EU) 2019/1023”). Furthermore, it amends the Insolvency and Corporate Recovery Code (CIRE), the Companies Code (CSC), the Commercial Registration Code, and other related legislation.

Of the various amendments introduced by Law 9/2022, the most noteworthy are those introduced in relation to the Special Revitalisation Process (Processo Especial de Revitalização – PER) and the insolvency process. This is due to the practical impact they have not only on companies undergoing a restructuring process, but also on their creditors and potential investors. The purpose of these changes is to streamline recovery and insolvency processes.

Amendments to the PER (Special Revitalisation Process) legislation

The Special Revitalisation Process Evaluation Report dated 8 July 2020 states that, from 2012 until the end of 2019, the PER has enabled “the recovery of numerous companies that would otherwise not have had at their disposal a mechanism capable of enabling their recovery, better serving the interests of the debtor and the respective creditors, also safeguarding countless jobs. In effect, the number of companies with approved recovery plans which have not resorted to special revitalisation processes or insolvency proceedings is 55.5%. This demonstrates the extent to which the economy has embraced the PER.

Another not insignificant factor that shows the good performance of the Special Revitalisation Process is the fact that more than 40% of the cases in which companies resorted to this process managed to obtain an agreement in order to continue their activity. This figure shows that the PER has served its purpose of safeguarding jobs and the economic fabric.”

Based on these data and in view of the need to incorporate Directive (EU) 2019/1023 into national law, by Law 9/2022, the Parliament introduced changes to the existing rules to ensure compliance of the PER with the Directive. It also made specific corrections to clarify substantive or procedural issues.

The main changes are as follows.

One aim is to ensure, on a case-by-case basis, the most equitable treatment of creditors on whom the effective restructuring of companies will depend. This is to be achieved by making it compulsory for companies other than micro, small and medium-sized enterprises to present, with their PER application, a proposal for the ranking of creditors affected by the recovery plan. This proposal must divide the creditors into distinct categories, according to the nature of their credits (ie, secured, privileged, common and subordinated creditors) and also reflect the whole range of creditors of the company according to the existence of sufficient common interests, namely:

  • employees, regardless of the type of contract;
  • shareholders;
  • banks that have financed the company;
  • suppliers of goods and service providers; and
  • public creditors.

Any remuneration of the provisional judicial administrator and any expenses they have incurred that are not paid constitute claims on the insolvency, if the company is declared insolvent following the non-approval of a recovery plan.

The law makes it clear that the preliminary order issued in a PER will prevent any enforcement action being brought against the company to recover debts for a maximum period of four months (standstill effect). This order can also cause the suspension of enforcement actions that have already been brought against the company for the same purpose. Enforcement actions to recover amounts owed to employees are excluded from the above rules.

It is provided that the judge can extend the standstill effects for one month if one of the following situations occurs: (i) significant progress has been made in the negotiations on the restructuring plan; (ii) the extension is essential to ensure the recovery of the company’s activity; or (iii) the continuation of the suspension of the enforcement measures does not unfairly prejudice the rights or interests of the affected parties. However, the judge may order the termination of the suspension if it no longer serves the purpose of supporting the negotiations on the recovery plan or at the request of the company or the provisional judicial administrator.

The concept of “essential executory contracts” is extended to include not only essential public services but all contracts of continuous performance necessary for the company to pursue its day-to-day activity. It includes any contracts for the supply of goods or services whose suspension would lead to the paralysis of the company’s activity. This ensures that, during the period of suspension of the enforcement measures, creditors cannot refuse to perform, terminate, bring forward the maturity or unilaterally alter essential executory contracts to the detriment of the company, in respect of debts constituted prior to the suspension, where the sole ground is non-payment of such debts. The price of goods or services essential to the company’s activity provided during the suspension period that are not paid are now considered a debt of the insolvent estate if the company is declared insolvent within two years of the end of the suspension period.

Similar to the pre-existing rule on insolvency, the new law provides for the nullity of any contractual clauses which provide a resolutive condition of the transaction if: (i) an application to open a PER is filed, (ii) the PER is opened, (iii) the application for an extension of the suspension of enforcement measures or the granting of such a suspension is filed. The same applies if such a clause gives the other party a right to compensation, termination or rescission of the contract.

Additional protection is granted to “financing acts” of the company, with the following provisions.

  • During the course of the PER or in the execution of the recovery plan, creditors may finance the company’s activity to provide it with capital for its revitalisation. If they do so, they enjoy a credit over the insolvent estate up to an amount corresponding to 25% of the company’s non-subordinated liabilities at the date of the declaration of insolvency. If the insolvency is declared within two years of the date of the final and unappealable decision approving the recovery plan, the credits made available above this amount will enjoy a general preferential credit privilege that ranks ahead of the general credit privilege granted to the employees.
  • Claims arising out of financing made available to the company by creditors, shareholders and any other persons in a special relationship with the company in implementing the revitalisation plan will qualify as general privilege claims ranking above the general credit privilege granted to employees.
  • Credits arising from financing made available to the company in the course of the PER or in implementing the recovery plan may not be subject to actio pauliana, that is, actions by creditors to have certain transactions by their debtors declared void as prejudicial to their interests.
  • The new financing and the interim financing cannot be declared void, voidable or unenforceable.
  • Anyone granting new financing and mezzanine financing may not incur, by virtue of that financing, civil, administrative or criminal liability on the grounds that the financing is detrimental to the creditors as a whole, except in cases expressly provided for by law.

The content of the recovery plan is now set out in greater detail. Among other aspects, the plan must contain: (i) the designation individually and broken down by class – and, if applicable, broken down by the categories into which they have been grouped for the approval of the recovery plan – of the parties affected by the content of the plan and their claims or interests covered by the recovery plan; (ii) the same details as in (i) regarding the parties that are not affected by the recovery plan, together with a description of the reasons why the proposed plan does not affect them; (iii) the arrangements for informing and consulting the representatives of the employees, the position of the employees within the company and, where appropriate, the general consequences as regards employment, in particular dismissals, temporary reduction of normal working hours or suspension of employment contracts; (iv) any new financing provided for under the recovery plan and the reasons why such new financing is necessary to implement the plan; and (v) a statement of reasons containing a description of the causes and extent of the company’s difficulties and explaining why there is a reasonable prospect that the recovery plan will prevent the insolvency of the company and ensure its viability, including the preconditions necessary for the plan’s success.

The rules are defined for the formation of the majorities required to approve the recovery plan, in the case of ranking of creditors by categories.

The law requires the provisional judicial administrator to present, together with the result of the creditors’ vote, a reasoned opinion on whether the revitalisation plan has reasonable prospects of avoiding the insolvency of the company or ensuring its viability.

There are new requirements for the judge to ratify the revitalisation plan or refuse its ratification. The judge must also assess whether: (i) in the case of ranking of creditors in separate categories, creditors in the same category are treated equally and proportionately to their claims and whether the dissenting voting categories of creditors affected receive treatment at least as favourable as that of any other category of the same rank, and more favourable than that of any category of a lower rank; (ii) any class of creditors under the recovery plan receives or retains more than the amount corresponding to the totality of its claims; (iii) any new financing necessary to implement the restructuring plan unfairly prejudices the interests of creditors; (iv) the recovery plan has reasonable prospects of preventing the insolvency of the company or ensuring its viability.

The law allows the judge to order an expert valuation of the company if any creditor asks the court not to ratify the plan on the grounds of the no creditor worse off principle vis-à-vis a liquidation scenario.

To overcome issues of unconstitutionality, the law was amended to ensure that in the event of non-approval of the reorganisation plan, a potential declaration of insolvency must always be preceded by the hearing of the company. If the company opposes the insolvency adjudication, the judge will determine the closure and termination of the PER.

Moreover, changes were also made regarding the PER itself. Most of them were for clarification purposes and they include the following.

  • There is no possibility of appeal against the order appointing the provisional judicial administrator.
  • Any application to join special revitalisation processes filed by commercial companies with which the company is in a control or group relationship, under the CSC, can only be made before the start of the negotiation period in the proceedings to which the others are to be joined.
  • Credit claims must indicate: (i) their origin, maturity date, amount of principal and interest; (ii) the conditions to which they are subject, both suspensive and resolutive; (iii) their common, subordinated, privileged or guaranteed nature and, in the latter case, the assets or rights which are the object of the guarantee and their registration identification data, if applicable; (iv) the existence of any personal guarantees, with identification of the guarantors; and (v) the applicable default interest rate.
  • The ranking of the related credits, in particular, due to the absence of sufficient common interests, is also grounds for challenging the provisional list of credits. The judge must then decide on the conformity of the formation of the categories of credits and can order their modification if they do not reflect all the company’s creditors or the existence of sufficient common interests between them.
  • Companies that have filed for insolvency during the period of suspension of enforcement measures are exempt from the obligation to file for insolvency.

Although it is still too soon to have a clear picture, the changes introduced are expected to have a positive impact and, in some cases, they may be absolutely decisive for the success of the PER.

The legislative changes regarding insolvency proceedings

When it comes to insolvency proceedings, there is a simple stated intention of aiming “essentially, to provide the occasional clarification of procedural or substantive issues where there is imprecision in the law, or dissension in legal doctrine or case law”. However, some of the amendments introduced will have an enormous material impact. The most important of them are as follows.

The insolvent is required to submit, with the initial insolvency petition, a document identifying any companies with which it is in a control or group relationship under the CSC or which are considered associated companies, and, if applicable, identifying the proceedings in which their insolvency has been requested or declared.

It is established that compensation claims arising from the termination of employment contracts by the insolvency administrator after the debtor’s declaration of insolvency are considered claims over the insolvency (créditos sobre a insolvência).

The law clarified the provision that the claims held by persons in a special relationship with the debtor are subordinated, provided the special relationship already existed at the time of their constitution (and not acquisition), and by those to whom they were transferred in the two years prior to the start of the insolvency proceedings.

There is clarification of the exhaustive nature of the concept of a person in a special relationship with the debtor as a natural or legal person.

A preferential creditor or secured creditor who appoints a natural person to administer the debtor is excluded from the concept of “de facto administrator”, provided that such person alone does not have special powers to dispose of the debtor’s assets.

Claims whose recognition or ranking requires the production of evidence are provisionally recognised and ranked by the court, for the maximum amount that could result from the recognition of the claims.

At the meeting to consider the report, if the creditors decide not to oppose it and the decision declaring the insolvency has become final and not subject to appeal, within 10 days of that meeting, the insolvency administrator must present a liquidation plan for the sale of the assets. This plan must include deadlines and a list of the specific steps to be implemented. Failure to present the liquidation plan will constitute grounds for dismissal of the administrator.

The amount to be guaranteed by the secured creditor for the purposes of acquisition of assets, by itself or through a third party, has been reduced from 20% to 10% of the value of the proposal presented.

Partial distributions are mandatory whenever EUR10,000 or more is deposited in the insolvent estate and its ownership is not disputed. However, for this to happen, the judgment declaring the insolvency must have become final and unappealable and the liquidation of the assets must have started. Furthermore, the deadline for challenging the list of creditors must have expired with no challenges being filed, or any challenge filed must already have been decided. Until these conditions have been met, the amounts to be distributed must remain on deposit, taking into account the maximum amount that could result from their recognition if the decision is not definitive. The insolvency proceedings must also not be at a stage where the final distribution can be decided.

As is the case with the PER, many of the amendments introduced by Law 9/2022 regarding insolvency proceedings were simply to clarify certain points. These include:

  • registration of the declaration of insolvency in the land, commercial and vehicle registries in relation to the assets or rights comprising the insolvent estate;
  • the possibility for the insolvency administrator to delegate, in writing, the performance of specific acts to an insolvency administrator currently registered on the official lists;
  • standardisation of some points of the rules applicable to restructuring such as the content of the plan and the majority required for its approval; and
  • clarification that the measures provided for in the insolvency plan affecting the debtor’s liabilities do not affect the existence or the amount of the rights of insolvency creditors, specifically, those voting in favour of the plan, against co-debtors or third-party guarantors of the obligation.

In insolvency proceedings, it is also necessary to ensure compliance with the new requirements, including those relating to the preparation of the plan. These proceedings also have to be more closely monitored in order to promote greater speed, which may have an impact, in particular, on the payment of creditors.


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Law and Practice


Sérvulo & Associados (SÉRVULO) is a Portuguese full-service law firm established more than 20 years ago, with more than 100 lawyers providing legal services in all relevant practice areas and sectors/industries. SÉRVULO is a member of three international networks of law firms (Legalink, Cathay Associates and Roxin Alliance), which enables it to provide comprehensive legal advice to clients on a truly global scale. SÉRVULO is also a founding member of the multilateral network of partnerships SÉRVULO LATITUDE⦵, formed by leading law firms from the full range of Portuguese-speaking countries, spanning four continents (Africa, America, Asia and Europe). In the restructuring and insolvency field, SÉRVULO has a multidisciplinary team, comprising around 20 dedicated lawyers from its finance and governance and litigation and arbitration departments, which has advised clients on some of the most complex and high-profile cases in Portugal and Europe in this area (eg, the liquidation procedures of BES, BANIF and BPP banks).

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PLMJ is a law firm based in Portugal that combines a full service with bespoke legal craftsmanship. For more than 50 years, the firm has taken an innovative and creative approach to produce tailor-made solutions to effectively defend the interests of its clients. The firm supports its clients in all areas of the law, often with multidisciplinary teams, and always acting as a business partner in the most strategic decision-making processes. With the aim of being close to its clients, the firm created PLMJ Colab, its collaborative network of law firms spread across Portugal and other countries with which it has cultural and strategic ties. PLMJ Colab makes the best use of resources and provides a concerted response to the international challenges of its clients, wherever they are. International collaboration is ensured through firms specialising in the legal systems and local cultures of Angola, China/Macao, Guinea-Bissau, Mozambique, São Tome and Príncipe and Timor-Leste. The firm would like to thank Ricardo Silva Pereira and João Tiago Morais Antunes for their contributions.

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