PORTUGAL Law and Practice Contributed by: Manuel Requicha Ferreira and Diana Avillez Caldeira, Cuatrecasas
• Subordinated credits: interests and credits held by persons having special relations with the debtor (eg, controlling shareholder, directors), etc. The payment will be performed according to the credit ranking: guaranteed credits, followed by privileged credits, then common credits and finally subordinated credits. If the assets of the insolvent estate are insuf- ficient to pay all creditors in full, payment to common creditors will be made by apportionment amongst all creditors in proportion to their credits. The payment of subordinated credits will only take place after full payment of common credits. 7.3 Length of Insolvency Process and Recoveries The duration of insolvency proceedings varies mark- edly (eg, depending on the court at stake, the com- plexity of the insolvency, the creditors and the claims/ oppositions). As a reference, the insolvency proceed- ings completed in the first quarter of 2025 had an average length of 53 months. Recoveries highly depend on the security and posi- tion of the relevant creditor, the assets and liabilities of the insolvent company and the type and number of creditors. As a reference, the credit recovery rate of the proceedings completed in the first quarter of 2025 was 7.4%. 7.4 Rescue or Reorganisation Procedures Other Than Insolvency There are two main recovery procedures outside an insolvency proceeding: the out-of-court recovery proceeding ( regime extrajudicial de recuperação de empresas RERE) and the special revitalisation pro- ceeding ( processo especial de revitalização PER). The RERE is an extrajudicial voluntary mechanism allowing the recovery of companies in financial dif- ficulties or imminent insolvency through negotiations with creditors for its revitalisation. The company and creditors, representing at least 15% of the company’s liabilities (non-subordinated), must sign a negotiation protocol and deposit it with the commercial registry. The agreement reached will have some similarities to the agreement in a PER, although the RERE (contrary
to the PER) does not provide for cramming-down of the non-participant creditors. The PER allows debtors that are in financial difficulties or face imminent insolvency, but whose recovery is still feasible, to negotiate with creditors an agreement for the revitalisation of the company that, if approved by the creditors and homologated by the court, will bind all creditors. A PER is deemed approved in the following situations. • If creditors are classified into different categories, it is voted for in each of the categories by more than two-thirds of all votes cast, thus obtaining: (a) the favourable vote of all categories; (b) the favourable vote of the majority of the es- tablished categories, provided that one of the categories is composed of secured creditors; (c) in the event there are no secured creditors categories, the favourable vote of the major- ity of the established categories, provided that at least one of the categories is composed of non-subordinated creditors; and (d) in the event there is a tie, the favourable vote of, at least, a non-subordinated category. • In the remaining cases, when it is voted by credi- tors whose credits represent at least one-third of the total number of claims with voting rights, if the plan obtains: (a) the favourable vote of more than two-thirds of the votes cast; and (b) the favourable vote of more than 50% of the votes cast pertaining to non-subordinated credits with voting rights. • When the recovery plan receives: (a) the favourable vote of creditors whose claims represent more than 50% of all claims with vot- ing rights; and (b) the favourable vote of more than 50% of the votes issued pertaining to non-subordinated credits carrying voting rights, as listed in the provisory credits list. Finally, the Legal Framework for Conversion of Debt into Equity allows companies in a negative equity posi- tion to restructure their balance sheet and strengthen equity via the conversion of debt.
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