PORTUGAL Law and Practice Contributed by: Manuel Magalhães, Mafalda Ferreira Santos, Francisco Boavida Salavessa and Maria José Lourenço, Sérvulo & Associados
2.4 Unsecured Creditors Restructuring proceedings, and insolvency proceed - ings in particular, restrain the exercise of creditors’ patrimonial rights outside the proceedings. While the insolvency proceedings are pending, the insolvency creditors may only exercise their patrimo - nial rights in said proceedings, which means that the exercise of rights such as retention of title or set-off can only be carried out in accordance with the CIRE rules, as follows. The holders of retention of title are generally han - dled as secured creditors, although Decree-Law No 48/2024 has recently established that the right of the holder of a retention of title over an immovable asset to be paid with preference over other creditors only applies in cases where the claim ensures the reim - bursement of expenses to maintain or increase the value of the asset. Set-off is limited by virtue of the declaration of insol - vency. It is only lawful where the legal requirements for the setting-off were met prior to the declaration of insolvency, or if the insolvency claim became enforce - able prior to the counterclaim of the insolvent estate. Subordinated claims may never be subject to set-off. In a PER, after the appointment of the provisional judicial administrator, pending enforcement actions against the debtor are suspended and creditors are prevented from requesting new enforcement proceed - ings. This means that creditors may use the general means at their disposal to exercise their rights against the debtor in the PER, except for those that determine the enforcement of their claim. 3. Out-of-Court Restructuring 3.1 Out-of-Court Restructuring Process Out-of-court restructuring agreements may be obtained through the conversion of credits into share capital or through a RERE procedure, which has the following principal characteristics.
Subject and Scope of the Procedure Conversion of credits into share capital
This regime aims to restructure the company financial - ly through the elimination of (all or part of) its liabilities, by giving creditors the right to force the shareholders of certain companies to consider proposals to convert their claims into share capital. Filing a RERE A RERE is aimed at corporate companies that are in financial stress or an imminent insolvency situation but are nevertheless able to recover. A RERE depends on the initiative of the debtor accom - panied by unrelated creditors representing 15% of its liabilities. Procedure and Duties of the Parties Conversion of credits into share capital The proposal to convert credits into share capital depends on some assumptions, as follows. • Relating to the value of the company’s equity and the value of outstanding claims: (a) the company’s equity must be below the share capital; and (b) non-subordinated claims against the company amounting to more than 10% of the total non- subordinated outstanding claims are in default for more than 90 days or, in the case of instal - ments of partial reimbursement of capital or interest, provided that they relate to non-subor - dinated claims with a value exceeding 25% of the total non-subordinated claims. • It must be supported by a report drawn up by a certified auditor showing that legal assumptions have been verified. • Shareholders always have priority in capital increases, on the grounds that the increase must be made in cash, which must be used to redeem the credits that, under the terms of the proposal, would be converted into capital. • The general meeting must be held within 60 days of receiving the proposal for its appreciation and decision making. • If the general meeting is not held or the proposal is not approved, the creditors can apply to the court with jurisdiction over the insolvency proceed -
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