The insolvency regime in Macau follows the conventional differentiation between bankruptcy and insolvency. Entrepreneurs engaged in commercial activities, such as commercial companies, individuals or entities acting on their own behalf or through third parties, are considered bankrupt if they fail to pay their debts promptly. Debtors who are not commercial entrepreneurs, such as freelance professionals, may be deemed insolvent if their liabilities exceed their assets.

The provisions of the bankruptcy regime apply to the insolvency regime, unless they do not relate to the commercial enterprise, without prejudice to specific provisions on insolvency and other regulations. Macau bankruptcy rules are dependent on the principle of territoriality.

Within the Macau jurisdiction, the most relevant laws and statutory regimes governing financial restructurings, reorganisations, liquidations and insolvencies of business entities are the following:

• the Macau Commercial Code, approved by Decree-Law 40/99/M of 3 August 1999;
• the Macau Civil Code, approved by Decree-Law 39/99/M of 3 August 1999; and
• the Macau Civil Procedure Code, approved by Decree-Law 55/99/M of 8 October 1999.

Insolvency proceedings may be voluntary, if initiated by the debtor, or involuntary, if commenced through the intervention of creditors or the Public Prosecutor’s Department, regardless of the debtor’s initiative.

Under Macau law, the statutory officer appointed in bankruptcy proceedings is designated as the “bankruptcy administrator” and the administrator’s rights and duties are governed by the Macau Civil Procedure Code.

Mortgage Creditors

Mortgage creditors have a higher priority compared to other secured and unsecured creditors. They are entitled to be paid from the proceeds of the sale of the mortgaged property before other creditors.

Pledge Creditors

Pledge creditors have a right to be paid from the proceeds of the sale of the pledged property before unsecured creditors. However, they have a lower priority than mortgage creditors.

Lien Creditors

The holder of a lien on real property has a right to be paid before the debtor’s other creditors, including mortgage creditors. This right of payment takes precedence over that of other creditors, including the mortgagee, unless the property retained is delivered. 

General Unsecured Creditors

General unsecured creditors do not hold any specific security interest in the debtor’s assets. They have a lower priority compared to secured creditors and are paid after the secured creditors have been satisfied.

Priority Unsecured Creditors

Certain creditors, such as employees, have preferred status and are given priority over general unsecured creditors. They are entitled to be paid out of the debtor’s assets before general unsecured creditors.

Subordinated Creditors

Subordinated creditors have a lower priority compared to general unsecured creditors. They are paid only after the claims of the general unsecured creditors have been satisfied.

In Macau insolvency proceedings, there are certain preferential claims that take precedence over other claims. Some of these priority claims are outlined below.

Government Claims

Priority will be given to claims by the Macau government for indirect or direct taxes due. These claims are considered to be of public interest and are given priority to ensure the government’s ability to collect taxes.

Administrative Expenses

Priority is given to expenses incurred in the administration of the bankruptcy proceedings, such as the fees and expenses of the bankruptcy administrator or liquidator. These expenses are necessary for the proper administration of the proceedings and are paid before other claims.

Employee and Pension Claims

Claims of employees for unpaid wages, salaries and other employment-related benefits and claims of pension funds for unpaid contributions are given priority. These claims are considered to be of high importance for the protection of the rights and interests of employees and pensioners.

Official Fees

Priority is given to the fees and expenses incurred by the bankruptcy administrator or liquidator for their services in the administration of the insolvency proceedings. These fees are usually paid before other claims in order to ensure the proper administration of the proceedings.

In the Macau SAR, secured creditors usually take the following liens/securities.

Mortgages and Pledges

Creditors can secure real estate and movable property that requires registration (cars, boats, aeroplanes) by means of mortgages created by public deeds, which are subject to public registration.

Items of movable property such as intellectual property, shares, bank accounts and financial instruments, which do not require public registration, are commonly secured through the creation of pledges.

Mortgages and pledges bestow upon creditors the right to be paid before ordinary creditors up to the amount of the secured asset.

Lien

Retention of title is primarily a practice used by trade creditors and suppliers to retain title to goods supplied until the debt has been paid in full. This practice is also commonly employed to secure vehicles, as it can be registered.

Financial Collateral

Financial instruments and funds held in bank accounts may be offered by a borrower to a lender through a financial collateral agreement that benefits from preferential treatment in the event of the debtor’s bankruptcy.

General Unsecured Creditors

General unsecured creditors do not have any specific security interest in the debtor’s assets. They have a lower priority compared to secured creditors and are paid after the secured creditors have been satisfied.

Priority Unsecured Creditors

Certain creditors, such as employees, have preferred status and are given priority over general unsecured creditors. They are entitled to be paid out of the debtor’s assets before general unsecured creditors.

Subordinated Creditors

Subordinated creditors have a lower priority compared to general unsecured creditors. They are paid only after the claims of the general unsecured creditors have been satisfied.

Under Macau law, there is no alternative to bankruptcy proceedings. However, under this process and in the early stage of the insolvency, it is possible to have an agreement between the creditors or for the bankrupt party to request that the court reduce the credit (concordata), which, if accepted by the court, will be proposed to the creditors, who may vote on such a request.

A concordata is a proposal that a debtor or one or more creditors can offer to other creditors to avoid the debtor being declared bankrupt. This proposal includes a condition that the debtor will pay off a certain amount of their debts within a specific timeframe. A concordata can also serve as a short-term suspension of regular loans.

The debtor must submit the application at least five days before the first creditors’ meeting, at which the credits will be verified. At the end of the meeting, any person to whom money is owed can propose a concordata. To pass the concordata, most creditors must vote in favour of it, with their votes representing at least 75% of the confirmed debts.

A concordata can be reached when 75% of the creditors vote in favour. Creditors who do not accept the settlement may, either individually or jointly, contest within ten days after its acceptance. With the court’s approval, the concordata is compulsory for all unsecured creditors, regardless of whether they accept the settlement, as long as these debts existed before the submission of the concordata to the court.

At least ten days prior to the meeting for creditors, the debtor can propose a “concordata”. This involves reducing or changing some or all of the owed debts, which may only be a temporary suspension.

If there is no concordata, the creditors can enter into a creditors’ agreement, in which they create a limited liability company to carry on the debtor’s business activity.

In cases where these preventative bankruptcy measures cannot be reached, the court will declare the bankruptcy.

Macau’s insolvency regime centres on court-supervised collective procedures with two principal restructuring avenues used pre- or in-bankruptcy: the concordata (composition with creditors) and the creditors’ agreement (which may involve a new company taking over assets and operations). Both are judicial in nature, require voting thresholds by value, and are subject to court oversight and confirmation. Macau does not provide a standalone debtor-in-possession preventive restructuring with super-priority financing or cross-class cram-down.

Regarding the concordata, creditors may propose amendments to the plan bases whether or not the debtor initiated it. Approval requires acceptance by a majority of voting creditors representing at least 75% of the total admitted claims, followed by court confirmation. Dissenting creditors may contest within ten days after acceptance. Once confirmed, the concordata binds unsecured creditors whose claims predate submission to the court, even without individual consent. Secured creditors are generally not compelled to compromise security or priority in the absence of consent, full satisfaction, or adequate protection consistent with the priority regime.

A creditors’ agreement likewise requires approval by creditors representing at least 75% of claims. The clauses of the future deed of incorporation for any vehicle that will carry on the business must be filed within the court’s deadline. Typical terms include:

• participation by signatory creditors and designated parties in the new company;
• allocation of shares by reference to participating creditors’ claims (in whole or part), with residual liabilities to non-participating creditors deducted as agreed;
• retention of the debtor’s assets by the company to the extent they exceed amounts needed to pay preferred claims, subject to secured creditors’ rights to be paid or fully guaranteed at maturity if collateral is retained; and
• payment to non-accepting creditors within no more than three years at an agreed percentage, in line with the framework referenced in Article 1061(2) of the Macau Civil Procedure Code.

Pending court approval, additional creditors may accede, and consenting creditors may improve the percentage offered to non-accepting creditors. If approved, bankruptcy proceedings terminate and the administrator’s functions cease.

Shareholder and stakeholder rights may be affected as the concordata or creditors’ agreement provides, and the law permits; however, restructuring focuses on creditor claims. Third-party/non-debtor releases (eg, guarantors, group entities, directors) are not a general feature and typically require the affected creditors’ consent; guarantees generally survive unless explicitly and validly compromised.

Voting occurs at court-convened creditors’ meetings with rights determined by admitted claim value. The administrator compiles and classifies claims for voting and distribution. Uncontested claims are recognised; disputed claims may be provisionally admitted for voting at the value indicated by the administrator, subject to subsequent judicial determination.

Preventive measures operate within the court process. On opening, a stay of individual enforcement actions generally applies. There is no separate out-of-court practitioner; the court appoints a bankruptcy administrator to manage the estate and facilitate proposals. Debtor-in-possession is not the norm; the administrator’s supervisory and management powers prevail after insolvency is declared.

Dissenting creditors are protected procedurally through the right to contest a concordata or creditors’ agreement within the prescribed period. Substantively, there is no cross-class cram-down: a plan cannot bind a non-consenting class without the statutory supermajority and court approval that bind unsecured creditors. Secured creditors’ in rem rights are preserved unless they consent to impairment or are paid/adequately protected.

New money does not enjoy codified super-priority. Financing during proceedings may be structured and secured under general law, subject to administrator and court oversight and to existing security and preferential claims; it does not automatically prime existing security interests.

Arbitration plays a limited role. Core insolvency functions – opening, verification and ranking of claims, stays, realisation and distribution – are reserved to the courts. Pre-existing arbitration agreements may govern arbitrable disputes on the merits, particularly where the estate is claimant and the dispute does not undermine collective proceedings; enforcement and distribution remain with the insolvency court.

As to timelines, proceedings begin with the petition, initial court scrutiny, appointment of the administrator, and prompt convening of the first creditors’ meeting. Unlisted creditors must file claims up to fifteen days before that meeting. A concordata or creditors’ agreement may be tabled and voted on once claims are organised for voting. After creditor approval, objections may be filed within ten days of acceptance, followed by the court’s confirmation decision. If confirmation is denied, the case proceeds to liquidation.

If there is neither a concordata nor a creditors’ agreement, or if they are rejected by the court, the debtor is immediately declared bankrupt.

If the debtor fails to comply with any of the obligations outlined in the concordata, creditors with claims predating the concordata’s approval may request that the debtor be declared bankrupt. If the debtor is declared bankrupt before the concordata has been fully complied with, the creditors can only contest the bankruptcy for the amount they have not yet received of the agreed percentage. However, the guarantees for the payment of this percentage remain in force.

During this initial stage of the bankruptcy proceeding, debtors will be involved in the management of their assets and that of the company, being only supervised by the bankruptcy administrator and the designated creditors. However, debtors are prohibited from taking any action that may reduce their assets or alter the situation of the creditors.

Once the bankruptcy proceedings have been filed, the court appoints the bankruptcy administrator, who helps and supervises the debtor both in running the business as well as managing the debtor’s other assets. Bankruptcy administrators can propose to the court any measures they think fit to prevent any act that might turn out to be detrimental to creditors’ interests, mainly to prevent asset stripping.

The creditors are actively involved in all preventative measures, by participating in negotiations on the concordata with the debtor or by submitting the concordata or creditors’ agreement to the court. The value of each claim is determined in the list of creditors prepared by the bankruptcy administrator, which may be challenged by the creditors.

In Macau, a creditor may exercise the right of set-off, offset or netting if the following conditions are met.

• Reciprocal Debts: There must be a mutual and reciprocal debt relationship between the creditor and the debtor. This means that the creditor must have a claim against the debtor that is of the same nature as the creditor’s claim against the debtor.
• Pre-Existing Debts: The debts subject to set-off, deduction or netting must have existed prior to the opening of the insolvency proceedings. As a general rule, debts arising after the opening of the proceedings cannot be set off.
• Notice Requirement: The creditor must give notice to the insolvency administrator or liquidator of its intention to exercise the right of set-off, offset or netting. This notice should include details of the claims and the basis for the set-off.
• Generally, the right of set-off may be exercised during the insolvency proceedings, provided that the creditor has given the required notice to the insolvency administrator or liquidator. It is important to note that the right of set-off, offset or netting may be temporarily suspended or terminated in certain situations. For example, set-off rights may be suspended or terminated if the debtor has obtained a court order for a moratorium or has committed fraudulent acts to avoid payment. In addition, if the set-off would result in unfair treatment of other creditors or is contrary to public policy, the court may limit or deny the set-off.

The debtor has the duty to present themself to the court within 15 days of failing to pay one or more debts that, considering the amount due and the circumstances in which default took place, evidence their incapacity to pay their debts as they fall due.

Under Macau law, creditors and the Public Prosecutor’s Department, which represents the interests it is bound to protect, have the right to legitimately file a petition with the court for the declaration of a merchant’s bankruptcy.

The applicant must submit a plea to the court, detailing the following:

• the grounds for the application;
• the source, type and value of their credits;
• an assessment of whether filing for bankruptcy would be appropriate before hearing from the debtor; and
• all pertinent evidence and any extra proof needed to bolster their plea.

Bankruptcy may be initiated by the debtor, any creditor, or the public prosecutor, supported by documentary evidence of insolvency. A creditor’s petition must set out the claim’s origin, nature, and amount, indicate whether immediate adjudication without hearing the debtor is warranted, and, for corporate debtors, identify any shareholders with unlimited liability. A debtor’s petition must:

• detail the causes of insolvency with supporting evidence;
• append the documentation required by Article 1048 of the Civil Procedure Code, including a list of creditors with addresses, amounts, maturities, and guarantees;
• identify all pending actions and executions;
• provide an inventory of assets and values if accounts are not organised; and
• for legal persons, include the corporate authorisation approving the filing.

Unlisted creditors may file claims up to fifteen days before the first creditors’ meeting. The bankruptcy administrator, with designated creditor assistance, compiles a list of creditors by status for the meeting:

• undisputed claims listed by the debtor;
• claims listed but disputed as to type or amount;
• partially disputed claims;
• fully disputed listed claims; and
• claims by previously unlisted creditors.

Uncontested claims are recognised, and claims supported by a majority of creditors present representing a majority in value may be provisionally recognised for meeting purposes. Where voting value is disputed, the administrator’s valuation prevails provisionally, subject to court review.

Opening the proceedings generally stays individual enforcement and consolidates related actions affecting the estate into the bankruptcy case, except for suits where the debtor is plaintiff, matters of personal status and capacity, and cases involving inseverable co-defendants. Estate management passes to the administrator under court supervision. Directors must co-operate, deliver books and records, and avoid acts prejudicing the estate, with breaches attracting civil and potentially criminal liability. The creditors’ meeting – convened and chaired by the judge with the public prosecutor attending – receives reports and decides on business continuation, measures to avert bankruptcy, and voting on a concordata or creditors’ agreement. Only creditors whose claims are not fully contested by the administrator may vote, and a creditor may not vote on its own claim.

Executory and pre-insolvency contracts are administered according to general insolvency principles. The administrator may continue or reject performance where lawful and beneficial to the estate, subject to curing defaults and preserving counterparties’ substantive rights. Insolvency- or filing-triggered termination or acceleration clauses may be unenforceable insofar as they conflict with mandatory insolvency rules, while secured creditors retain their security in the absence of consent, payment, or adequate protection.

Arbitration is available for disputes that are arbitrable under substantive law and do not trench on the insolvency court’s exclusive functions, particularly where the estate seeks relief under pre-existing contracts governed by arbitration agreements. Core insolvency matters – including commencement, claim verification and ranking, stays, plan confirmation, asset realisation, and distribution – are non-arbitrable and fall within the exclusive jurisdiction of the insolvency court.

Initially, debtors may retain the authority to manage their assets and run their company, under the guidance and supervision of the bankruptcy administrator and designated creditors. However, they are prohibited from performing any action that would result in a reduction of the estate or a modification of the standing of creditors. Upon the declaration of bankruptcy, the debtor/bankrupt is not allowed to handle or sell their current and future possessions, which then become part of the bankruptcy estate. The bankruptcy administrator assumes responsibility for representing the bankrupt in all financial matters related to the estate.

The declaration of bankruptcy entails:

• closing the bankrupt’s current accounts;
• the immediate maturity of all debts;
• the discontinuation of interest or other charges on the bankrupt’s obligations; and
• the cessation of discounting on obligations subject to discounting.

Creditors are repaid from the proceeds of the sale of assets within the bankruptcy estate. Initially, these proceeds are used to cover debts of the insolvency estate, primarily liquidation expenses, with any remaining funds then allocated to creditors according to the amounts and priority established in the court-approved list of recognised creditors. Given that the proceeds are typically insufficient to fully cover all recognised debts, creditors receive payment on a pro rata basis within each class.

Interim payments become available once a final decision on the ranking and value of credits has been reached and are, in certain circumstances, currently mandatory.

Pre-insolvency attachments and enforcement measures are generally stayed upon the opening of proceedings, subject to statutory preferences and exceptions. Retention of title is recognised under substantive law and respected in insolvency to the extent validly constituted and enforceable, with practical enforcement co-ordinated through the administrator and court. Set-off rights existing prior to opening may be exercised where the legal requirements are met, while post-opening set-off is restricted to prevent unfair preference and preserve pari passu treatment.

Secured creditors retain their rights in rem over collateral. Security interests survive insolvency, but enforcement is co-ordinated within the collective process and may be subject to the stay and court oversight to avoid dismemberment of the estate and to maximise realisation. Secured creditors are paid from collateral proceeds according to rank after costs and prior charges. Unsecured creditors share pro rata after satisfaction of preferential and secured claims, and shareholders rank last, typically receiving value only if a restructuring preserves equity on agreed terms.

Creditors influence but cannot arbitrarily block the process. They may vote on a concordata or creditors’ agreement, object to proposals, contest claim admissions, and challenge confirmation on statutory grounds. A supermajority by value is required to approve restructuring proposals; without reaching that threshold and obtaining court approval, a plan cannot bind dissenters. There is no cross-class cram-down mechanism allowing one consenting class to impose terms on a non-consenting class outside the statutory voting thresholds. Dissenting unsecured creditors can be bound if the supermajority threshold is met and the court confirms the concordata, but secured creditors are not compelled to surrender or subordinate their security without consent, payment, or legally recognised adequate protection.

Third-party or non-debtor releases are not ordinarily permitted in a statutory plan in the absence of express consent of the affected creditors. Guarantees and co-obligor liabilities generally survive the debtor’s restructuring unless creditors agree otherwise, and extending plan effects to non-debtors is atypical and closely scrutinised.

The opening of proceedings triggers an automatic or court-ordered suspension of individual enforcement actions against the debtor and estate property, ensuring collective treatment. The stay is not absolute: actions where the debtor is plaintiff, proceedings concerning personal status and capacity, and matters involving additional defendants may continue. Secured creditors’ enforcement is co-ordinated with the insolvency court and administrator and may be temporarily deferred to maximise estate value, but underlying liens and priorities remain intact. New money extended during proceedings may be secured under general law but does not obtain automatic super-priority over existing secured claims.

Overall, the regime preserves creditor rights within a court-controlled collective process that emphasises orderly administration, equality among similarly situated creditors, and the possibility of consensual restructuring by supermajority vote with court approval, without cross-class cram-down or non-debtor releases.

As per the information available, there are no international rules, standards, guidelines or best practices applicable in Macau for the restructuring and insolvency regime.

The courts of Macau shall have jurisdiction to hear an action for the declaration of bankruptcy provided that the domicile or the principal administrative organ of the commercial entrepreneur is in Macau, or that neither of the above is in Macau, but that the action arises from a debt incurred in Macau or due to be performed in Macau, and the commercial entrepreneur maintains a branch, agency, sub-office, sub-sub-agency, agent or representative office in Macau. However, the liquidation is limited to property located in Macau.

Macau bankruptcy rules are subject to the principle of territoriality – ie, foreign bankruptcy/insolvency proceedings will not have effect in Macau unless the foreign insolvency is recognised under the relevant provision of the Macau Civil Procedure Code.

Macau courts may recognise foreign insolvency proceedings if certain conditions are met.

• Reciprocity: The foreign country must have a reciprocal arrangement with Macau for the recognition of insolvency proceedings. This means that Macau will only recognise and provide assistance to foreign proceedings if the foreign country also recognises and provides assistance to Macau insolvency proceedings.
• Jurisdiction: The foreign insolvency proceedings must have been commenced in a country where the debtor has its centre of main interests, which is generally the place where the debtor conducts its main business activities or where its main assets are located. Please note that if the company has its registered office located in Macau, the Macau courts consider themselves to have exclusive jurisdiction over bankruptcy and insolvency proceedings.
• Public policy: The recognition and assistance must not be contrary to Macau’s public policy. Macau courts may refuse to recognise or provide assistance if the foreign proceedings are deemed to be inconsistent with Macau’s fundamental principles of justice or public order.

Foreign insolvency judgements are only enforceable in Macau through a special procedure for the recognition and revision of foreign judgments. It should be noted, however, that the Macau courts have exclusive jurisdiction over bankruptcy and insolvency proceedings involving companies incorporated in Macau. Otherwise, judgments will be revised and confirmed by the Macau Intermediate Court, provided that:

• the judgment is intelligible, final and conclusive;
• there was no fraud in the course of the relevant proceedings, and it is not a matter of the exclusive competence of the courts of Macau, such as proceedings relating to real estate rights of properties located in Macau and matters of insolvency and bankruptcy;
• the matter of the judgment is not the subject of a case pending in the court of Macau or a case that is res judicata according to the laws of Macau, except in cases where the action commenced in the foreign court or arbitral tribunal before action was instituted in the court of Macau;
• the defendant was regularly summoned to the proceedings of the foreign court or tribunal and the adversary system and principle of equal standing of the parties were observed in the proceedings; and
• the enforcement of the judgment would not result in a clear violation of public policy in Macau.

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

Creditors in Macau will be paid first in proportion to the debtor’s assets (representation) in Macau. This is guaranteed by provisions in both banking law and the commercial code.

Under Macau law, directors are responsible for running the company and acting in its best interests. They must be careful and act like good managers.

Directors must also file for bankruptcy if necessary. Directors can be held responsible to creditors if the company does not have enough money to pay them, and the directors have acted contrary to the law or articles of association, which are designed to protect creditors.

Directors have a legal duty to compensate the company for any loss caused by their breach of duty imposed by law or the articles of association. They can only avoid liability only if they can prove that they acted without fault.

Directors are also liable to the company’s creditors if, in breach of a provision of the law or of the articles of association aimed at their protection, the company’s assets become insufficient to meet the creditors’ claims.

Therefore, if the directors have acted to the detriment of the company’s assets or creditors, the company may, within three months of the resolution, bring an action against the administration of the company. This action is subject to a resolution of the shareholders, passed by a simple majority, resulting in the dismissal of the directors concerned.

If the company or its shareholders have not already done so, the company’s creditors may exercise the right of indemnification to which the company is entitled. This is subject to the condition that there is a serious risk of a substantial reduction in the patrimonial guarantee.

After the declaration of bankruptcy, claims alleging breach of duties owed by directors to creditors are exclusively brought by the bankruptcy administrator.

The bankruptcy administrator’s duties include the following.

• Initially, these duties are to assist and supervise the debtor’s actions in the management of the company and the administration of its assets, issuing circulars to the creditors informing them of the meeting of creditors, drafting the report to be submitted to the meeting of creditors and proposing to the court the measures deemed appropriate to safeguard the interests of the creditors in the event of a risk of loss or dissipation of the assets.
• Once the bankruptcy has been declared, the bankruptcy administrator may carry out all ordinary administrative acts in respect of the bankrupt’s assets; the exercise of any special powers is subject to the express authorisation of the public prosecutor.
• In the interests of both the bankrupt and the creditors, the bankruptcy administrator should execute whatever is suitable for safeguarding and enabling the bankrupt’s rights.
• Additionally, the bankruptcy administrator must probe into the bankrupt’s estate, the circumstances under which business was conducted, and the triggers for the insolvency, to forestall further impoverishment of the bankrupt’s financial circumstances.

The sale of assets belonging to the bankrupt estate is carried out by the bankruptcy administrator under the supervision of the public prosecutor. Once the bankruptcy declaration is final, there will be a sale of all assets listed for the bankruptcy estate, which should be completed within six months (the judge may extend it for a period not exceeding six months, at the request of the bankruptcy administrator and upon hearing the public prosecutor).

Directors can be held responsible for any harm caused to the company by their breach of duties under the law or the company’s articles of association. They can only escape liability if they can prove that they acted responsibly. Directors can be held directly liable to the shareholders for damage caused by their actions in the course of their duties.

In some cases of gross negligence, wilful misconduct or fraud, criminal charges may apply.

Transactions concluded before the bankruptcy declaration order may be annulled and/or terminated and the assets returned to the bankruptcy estate, provided that the counterparty acted in bad faith. The following are examples:

• non-onerous or gratuitous transactions (ie, transactions intended to provide a pecuniary or other benefit to one of the parties) entered into up to two years before the declaration of bankruptcy, which have resulted in asset dissipation;
• asset distributions made in the year before the declaration of bankruptcy, where the portion allocated to the bankruptcy estate comprised assets that could easily be concealed, while the remaining interested parties received allocations of real estate or registered assets; and
• onerous transactions (ie, transactions intended to provide an advantage to both parties) executed in the six months before the declaration of bankruptcy with:
1. an entity controlled (direct or indirectly) by the bankrupt;
2. an entity who controls (direct or indirectly) the share capital of the bankrupt; or
3. an entity’s administrators or directors.

Furthermore, the following acts or transactions are presumed to have been concluded in bad faith for the purpose of defending against a claim of fraud: 

• payments or set-off agreements involving unusually large amounts made up to one year before the declaration of the bankruptcy, for the settlement of either outstanding or not outstanding debts;
• collateral security given after the constitution of the liability secured, within one year before the declaration of the bankruptcy;
• collateral security executed simultaneously with the constitution of the liability secured, within 90 days before the declaration of the bankruptcy;
• transactions entered into up to two years before the declaration of bankruptcy that are onerous in nature, in that the obligations and liabilities assumed by the bankrupt are unreasonably higher than those assumed by the counterparty; and
• execution of guarantees or letters of credit for transactions without any real advantage to the bankrupt, concluded up to two years before the declaration of the bankruptcy.

The period within which transactions may be challenged or reversed is as follows:

• six months for any detrimental action taken by the bankrupt in relation to a company or civil partnership which they control (either directly or indirectly) or, if the bankrupt is a legal person, in relation to a company or civil partnership which controls the bankrupt’s capital or is controlled by the bankrupt, or in relation to the administrators, managers or directors of these entities; and
• two years for all other transactions.

Claims to set aside or annul transactions can be brought by either the bankruptcy administrator (subject to authorisation given by the public prosecutor) or the bankrupt’s creditors.