PORTUGAL Law and Practice Contributed by: Manuel Magalhães, Mafalda Ferreira Santos, Francisco Boavida Salavessa and Maria José Lourenço, Sérvulo & Associados
istrator – ie, essentially the claims that arise from events that occurred after the insolvency declara - tion. Claims against the insolvent estate are paid in full when due and do not need to be claimed within the insolvency proceedings. These claims benefit from priority over the insolvency claims. It must be ensured that the insolvent estate has sufficient means to pay the remaining claims against the insolvent estate – ie, the fees of the insolvency administrator and the court costs. Insolvency claims Insolvency claims are those that arise from events that occurred before the date of the declaration of insolvency. They are paid according to the insolvency proceeding rules (paritas creditorum principle), con - sidering their nature and type. These claims must be made before the insolvency administrator within the insolvency proceeding, otherwise they cannot be paid in said proceeding. Secured, Preferential, Non-Preferential and Subordinated Insolvency Claims Insolvency claims are usually ranked according to their substantive nature. The rule is that the settle - ment of these claims takes place according to this classification, and only once all claims of a higher rank have been paid in full. Therefore, within insolvency proceedings, the credi - tors’ priority waterfall is as follows. • Secured claim – this is a claim guaranteed by a specific asset. A claim benefitting from special credit privileges (ie, privileges over specified assets of the debtor) is handled as a secured claim and will be paid in advance of the claims of other secured or preferential creditors, from the proceeds of the sale of the assets subject to the security. • Preferential claim – this is a claim arising from general credit privileges (ie, privileges over the generality of the assets of the debtor) and will be paid in advance of the claims of unsecured credi - tors, and pro rata within the same category (the law provides for precedence between several general
credit privileges), from the proceeds of the sale of the assets of the debtor. • Non-preferential claim – also called a “common” or “ordinary” claim, this is the residual classification for claims that do not benefit from a guarantee or privilege and are not subordinated, and will be paid pro rata within the same category. • Subordinated claim – these will only be paid when all the non-preferential credits are fully satisfied. The subordination can arise either from a contrac - tual arrangement or from legal determination. The law also establishes a ranking between subordinat - ed claims of different types (eg, shareholder loans are the last claims to be paid). Each class of creditor has the right to be paid in accordance with the priority waterfall outlined above. 2.2 Priority Claims in Restructuring and Insolvency Proceedings Within the context of insolvency proceedings, there are some cases where priority claims prevail over oth - ers within the same category, or benefit from special treatment for some reason. • Creditors who finance the activity of the com - pany within the PER or within the execution of the recovery plan (interim financing) have a credit over the insolvent estate and/or (under certain condi - tions) benefit from general movable credit privilege, graduated before the general movable credit privi - lege granted to employees. This privilege extends to credits resulting from interim financing granted by creditors, partners, shareholders and any other persons specifically related to the company. • As mentioned in 2.1 Types of Creditors , claims against the insolvent estate (such as court fees of the insolvency proceedings; the insolvency admin - istrator’s fees; debts arising from the administra - tion, liquidation and distribution of the insolvent estate; debts arising subsequent to the declaration of insolvency and from agreements that cannot be or have not been terminated by the insolvency administrator) will be paid as they fall due. • Tax and social security credits held by the Portu - guese Republic cannot be subject to a haircut in a PER or in a recovery plan.
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