PORTUGAL Law and Practice Contributed by: Manuel Magalhães, Mafalda Ferreira Santos, Francisco Boavida Salavessa and Maria José Lourenço, Sérvulo & Associados
• all insolvency proceedings against the debtor are stayed (as long as no judgment declaring insol - vency has been handed down); and • all limitation and prescription periods applicable to the company are suspended. After the appointment of the PA, the process is as follows: • creditors have 20 days to lodge their claims; • the PA issues a provisional list of claims; • any creditor may challenge the provisional list of claims; and • the court rules on any challenges. Once the deadline to challenge the provisional list of claims has passed, out-of-court negotiations are initi - ated between the debtor and the creditors. The negotiation period lasts for two months and may be extended once for one month, upon prior written agreement entered into by the PA and the debtor. Regarding the content of the recovery plan, the fol - lowing applies: • any right or claim may be restructured according to the recovery plan (except tax and social security claims), including the rights or claims of dissenting creditors; • it may include, among other things, a cram-down of the credits and/or the restructuring of repayment conditions, the provision of collateral and the trans - fer of assets to creditors; and • it may provide that some contracts will be signed to obtain new money required for the continua - tion of the business, which may be secured with liens/security by assets of the company (both the agreement to accept new money and its liens are immune to annulment in case of a subsequent insolvency declaration). Although unlikely, the PER may provide for the exon - eration of third parties or non-debtors (such as guar - antors) through the haircut or extinction of their obli - gations.
The PER is usually concluded within six to eight months in its standard form, and within two to four months in its shorter form. The PER is publicly avail - able for consultation by interested parties. 4.3 The End of the Restructuring, Rehabilitation and Reorganisation Procedure The PER has the following possible outcomes. • Approval of the recovery plan – if confirmed by the court, the recovery plan will bind all creditors, even the ones who have not filed their claims, partici - pated in the negotiations or voted for (or against) the recovery plan. • Non-approval or non-confirmation of the recovery plan – if the recovery plan is not approved by the legal majority of creditors, or if it is approved but not confirmed by the court, the PER is terminated. In the scenario of approval and confirmation of the recovery plan, if the debtor fails to comply with the recovery plan for more than 15 days after receiving written notice from any creditor, any moratorium or waiver provided for in the recovery plan ceases to be effective, and creditors may request the company’s declaration of insolvency. The debtor may continue to operate its business dur - ing the PER 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, the acqui - sition of property, the conclusion of long-term agree - ments, the assumption of liabilities or the provision of collateral. Without the PA’s approval, said transactions have no effect. Moreover, the debtor is required to refrain from act - ing 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. The debtor may borrow money or seek funding during the PER. Such credits benefit from a statutory right of 4.4 The Position of the Debtor in Restructuring, Rehabilitation and Reorganisation
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