2015-05-19

The main purposes of Portuguese insolvency are to promote the rehabilitation of insolvent businesses through restructuring and, when that is not possible, to provide the best possible satisfaction of the creditors through the liquidation the company's assets.

The Portuguese insolvency code is among the most advanced insolvency laws in Europe and the world. According to the World Bank's report "Doing Business 2015", Portugal ranks in 10th place in the world (4th in the European Union) on ease of resolving insolvency, which measures the speed, cost and recovery rates in insolvencies in 189 countries.

In this publication we provide practical advice to companies and creditors to help them in a Portuguese corporate insolvency procedure and to negotiate a business restructuring. Here are a seven tips for negotiating a corporate restructuring in Portugal:

1. Before filing to the insolvency always obtain a reliable financial analysis and consider your chances of recovery in a restructuring liquidation proceeding.

2. Be prepared. Be sure to have a reliable resolvability analysis of the company to calculate all the financial repercussions. Be sure that there is a legal basis for having the company declared insolvent.

3. Evaluate your position. Confirm your credit ranking and those of other creditors and try to evaluate your position among the creditors and other stakeholders.

4. Be available for an out-of-court composition. Do not rely on your legal position and do not put a company into insolvency without exhausting all possibilities of an out-of-court arrangement. If an out-of-court arrangement is not possible, try to enter into a Portuguese "revitalization" arrangement. 

5. Be involved in the decision-making process, seek to be appointed to the Creditors' Committee, which is in charge of overseeing the restructuring procedure. Be proactive in the restructuring negotiations with the other creditors and the company.

6. Be vigilant. Create a direct line with the Administrator. Evaluate critically each of the steps taken by the Administrator to ensure that the process is managed in a proper and efficient manner.

7. Follow the liquidation closely. Make sure that assets are sold for fair consideration.

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