Portugal

The insolvency procedure in Portugal is a universal enforcement process designed to satisfy the claims of creditors. An insolvency administrator is always appointed and, as a general rule, holds the powers to administer the insolvency estate. However, in specific cases — and subject to the debtor’s request and commitment to submit an insolvency plan aimed at business recovery — the debtor may retain possession and administrative powers. During insolvency proceedings, creditors decide whether:

• the company’s assets should be liquidated; or
• to approve an insolvency plan that provides for the company’s recovery.

Without prejudice to private agreements or arrangements that may be entered into by the debtor with particular creditors which may foresee, namely, moratorium periods, a more general protection can be obtained by initiating the appropriate restructuring process under the available workout tools, which are, with relevance, the following:

Special Revitalisation Process

For companies and other businesses (excluding consumers) that are not yet insolvent but are experiencing severe financial distress — specifically, significant difficulty in meeting matured debt obligations due to liquidity shortages or lack of access to external financing — the CIRE establishes, in Articles 17-A to 17-J, a multi-creditor restructuring mechanism known as the Special Revitalisation Process (PER). The restructuring is achieved through a court-approved agreement negotiated and accepted — either before or after the PER filing — between the debtor and a majority of its creditors.

Special Payment Agreement Procedure

The Special Payment Agreement Procedure (PEAP), which is foreseen under Articles 222.º-A to 222.º-J of the CIRE, is similar to the PER, but applicable to legal persons, including individuals, that do not own a company.

Regime on the Extrajudicial Restructuring of Businesses

With the exception of individuals who do not own a business, other individuals and corporate entities experiencing severe financial distress or imminent insolvency may resort to the out-of-court restructuring mechanism established under the RERE, governed by Law No. 8/2018 of 2 March. The purpose of RERE is to regulate the terms and effects of negotiations and agreements — which may be subject to confidentiality — between a debtor and one or more creditors. These agreements aim to restructure the debtor’s assets and liabilities or adjust any other component of its capital structure.

Temporary stay

Either of the available mechanisms enable debtors to obtain a temporary stay while they restructure their assets and/or liabilities with the goal of restoring financial and economic viability. During the stay period:

• any pending proceedings aimed at debt collection or declaring the debtor insolvent are suspended;
• creditors are prohibited from initiating new collection actions; and
• all statute of limitation periods are suspended.

In the RERE, these measures only apply to the creditors that are taking part in the negotiations.

The debtor-in-possession restructuring regimes include PER, PEAP, and RERE. Among these, the PER is the most commonly used mechanism. It applies to corporate debtors and offers a key advantage: the restructuring plan, once approved by a majority of creditors and confirmed by the court, becomes binding on all creditors, even those who did not participate in the proceedings or voted against the plan.

3.1 What are the conditions to entry?

PER

The debtor may submit an application to the competent court either:

• to initiate negotiations for a restructuring agreement, supported by a statement from unsubordinated creditors holding at least 10% of the claims (or, under justified conditions, 5%), confirming that negotiations have begun with the aim of restructuring the debtor’s business and activities; or
• to obtain court approval of a restructuring agreement already concluded with the majority of creditors prior to filing.

The application must include mandatory documentation regarding the debtor, such as:

• a declaration issued by an auditor, dated no earlier than 30 days before the PER application, confirming that the debtor is not insolvent; and
• either a proposed restructuring plan or the restructuring plan already approved by the majority of creditors.

PEAP

The debtor, together with at least one creditor, may submit an application to the court to initiate negotiations for a restructuring agreement.

RERE

For RERE eligibility, participating creditors must hold at least 15% of the debtor’s total unsubordinated claims. The automatic application of certain tax effects provided under CIRE requires that the creditors party to the restructuring agreement hold at least 30% of the total unsubordinated claims. Upon successful completion of negotiations and execution of a restructuring agreement — or if an already executed agreement is to be subject to the RERE — the agreement must be filed with the Companies Register.

3.2 Can creditor claims be compromised “within a class”?

Under the PER, creditor claims can be compromised within a class, as the debtor may propose a class structure based on the category of the respective credits:

• preferential;
• secured;
• unsecured; or
• subordinated.

Additionally, sub-classes may be formed to reflect common interests among creditors within the same category.

3.3 Is there a “cross-class cram down”?

The PER allows for a cross-class cram down. Under this regime, when creditor classes are divided into distinct subcategories, the recovery plan must be approved in each category by more than two-thirds of the votes cast (excluding abstentions), and must obtain:

• the favourable vote of all subcategories formed;
• the favourable vote of the majority of subcategories, provided that at least one subcategory consists of secured creditors;
• if there are no secured creditor subcategories, the favourable vote of the majority of subcategories, provided that at least one subcategory consists of unsubordinated creditors; or
• in the event of a tie, the favourable vote of at least one subcategory of unsubordinated creditors.

As a result, a recovery plan may be approved even if not all creditor classes vote in favour, meaning that dissenting classes can still be bound by the plan.

3.4 Can shareholder claims be compromised?

Shareholder claims are often classified as subordinated claims, depending on whether the shareholders are considered to have a special relationship with the debtor. As a result, these claims are frequently compromised in the following ways:

• Limited voting influence. When creditor classes are divided into subcategories, the class of subordinated claims carries little weight in approving a restructuring plan (as explained in Question 3.3).
• Reduced impact on majorities. Even if classes are not formed, the votes of subordinated creditors have minimal influence on achieving the required majorities for plan approval.
• Significant write-offs. Since the approval of a restructuring plan must comply with the “no creditor worse off” principle — and subordinated claims are generally unrecoverable in insolvency proceedings — it is common for these claims to be subject to a total or substantial write-off in the restructuring plan, even if subordinated creditors vote against its approval.

3.5 Can secured creditors’ claims be compromised? Are deficiency claims treated differently?

Under the PER, secured creditors’ claims and deficiency claims may be compromised, provided that such compromise does not violate the “no creditor worse off” principle, meaning secured claims cannot be treated less favourably under the restructuring plan than they would be in a liquidation scenario. Deficiency claims are unsecured, meaning that the likelihood of being compromised is higher.

3.6 Can creditors propose competing plans?

The initiative to commence a restructuring process lies exclusively with the debtor. Consequently, outside insolvency proceedings, only the debtor may propose a restructuring plan, not the creditors.

3.7 What level of court or other third-party supervision is there of the process(es)?

PER and PEAP

The PER and PEAP share several similarities, one of which is the appointment by the court of an interim judicial administrator when a debtor initiates either process.

The judicial administrator’s duties include:

• preparing the creditors list based on the claims submitted;
• guiding and supervising negotiations between the debtor and creditors; and
• authorising or refusing significant actions by the debtor, particularly those that may affect claim satisfaction or the company’s recovery.

In the PER, the judicial administrator must also issue a non-binding opinion on whether the proposed plan offers reasonable prospects of avoiding insolvency or ensuring the company’s viability.

The court makes the final decision on plan approval by verifying compliance with legal majorities, basic principles, and procedural rules. In the PER, the court also assesses the substantive merits of the plan, meaning it may refuse homologation — even if approved by the required majority — if the plan does not reasonably ensure the company’s viability or prevent insolvency.

RERE

The RERE is an out-of-court workout tool, which means that there is no supervision by the court nor by an insolvency practitioner. The supervision is limited to the compliance with the requirements to apply for a RERE, which is verified directly by the Companies Register, and with the compliance with the requirements to benefit from the tax effects foreseen under the regime, which is verified by the Tax Authorities.

The RERE is an out-of-court restructuring mechanism, meaning there is no court supervision and no judicial administrator involvement. Oversight is limited to:

• verification by the Companies Registry of compliance with RERE application requirements; and
• verification by the Tax Authorities of compliance with conditions for tax benefits under the regime.

4.1 What is the applicable law that provides for clawback and/or antecedent transaction claims?

Chapter V (Articles 120–126) of the CIRE regulates the clawback claims, providing for the possibility for the insolvency administrator to terminate acts performed or omitted by the insolvent party during the so-called suspicion or look-back period

As a rule (see Article 120 of the CIRE), termination is conditional as it can only operate if two cumulative requirements are met:

• the act or omission is detrimental to the insolvent estate (i.e. it diminishes, frustrates, hinders, endangers, or delays the satisfaction of creditors); and
• the third party has acted in bad faith (bad faith exists when the third party is aware, at the time of the act or omission: that the debtor was insolvent; of the prejudicial nature of the act or omission and that the debtor was in a situation of imminent insolvency at that time or of the commencement of insolvency proceedings). Bad faith is presumed, iuris tantum, when the act or omission occurred during the period of suspicion and in which a person specially related to the insolvent party participated or benefited (see Article 49 of the CIRE), even if the relationship did not exist on that date (Article 120, No. 4, of the CIRE).

Article 121 of the CIRE exhaustively provides for cases in which termination is unconditional (i.e. in which it can operate without the need to verify any requirement, in particular that of prejudiciality, which is presumed, or the bad faith of the third party). Essentially, this concerns acts:

• of a gratuitous nature (cf. Article 121(1)(b));
• which do not meet the minimum requirements of equivalence between the insolvent party’s performance and that of the counterparty (cf. Article 121(1)(a), (d), and (h)); or
• that benefit certain creditors, in particular through the provision of collateral or advance payments (see Article 121(1)(c), (d), (f), (g), and (i)).

4.2 What are the relevant “look-back” periods for claims?

The look-back period for the conditional termination is two years prior to the date of commencement of the insolvency proceedings (maximum limit).

In the cases where the termination is unconditional, the look-back period varies between 60 days to two years prior to the date of commencement of the insolvency proceedings.

4.3 Who can pursue the claims?

After the insolvency is declared, claims can be pursued by the appointed insolvency administrator.

4.4 What remedies are available and how do they operate in practice?

Under Article 123(1) of the CIRE, once insolvency is declared, the insolvency administrator may terminate any transaction deemed detrimental to the insolvency estate within six months of becoming aware of the transaction, but never later than two years from the date of the insolvency declaration.

The insolvency administrator may terminate any transaction detrimental to the insolvency estate by sending a registered letter to the parties involved declaring its termination. If there is no reaction from the parties, the termination of the transaction does not require court confirmation.

The insolvency administrator may also initiate judicial proceedings to compel a third party to transfer certain assets to the insolvency estate.

4.5 What defences are available?

Parties to the transaction — including the insolvent — may challenge the insolvency administrator’s termination by filing proceedings against the insolvency estate within three months of becoming aware of the termination. The challenge must be based on the argument that the transaction does not meet the legal requirements for termination. The lines of defence usually include claiming that the transaction was for consideration and was not detrimental to the insolvency estate, and also that the third party was acting in good faith.

4.6 Is there a general right of action in respect of transactions defrauding creditors or Actio Pauliana claims?

Avoidance actions, including Actio Pauliana, are foreseen under Articles 605–618 of the Civil Code.

Regardless of the insolvency having been filed, creditors may challenge transactions entered into by the debtor with a third party acting in bad faith at an undervalue within a period of five years after the execution of the transaction (Article 618 of the Civil Code and Article 127 of the CIRE).

4.7 Who can pursue the claims?

Any creditor may file for an avoidance action (Actio Pauliana), except if, after insolvency is declared, the insolvency administrator has already enforced the adequate measures aimed at terminating the transaction detrimental to the insolvency estate.

4.8 What remedies are available and how do they operate in practice?

If the Actio Pauliana is upheld, the creditor is entitled to restitution of the assets to the extent of their interest and may enforce them against the property of the party obliged to return them, as well as carrying out acts of preservation of the available assets as permitted by law.

4.9 What defences are available?

The success of an Actio Pauliana depends on the following cumulative requirements:

• an existing credit;
• an act by the debtor that diminishes the available assets (empties the estate);
• that the act makes satisfaction of the credit impossible or more difficult; and
• the credit predates the act, or bad faith by the debtor and the third party if the credit is subsequent.

Additionally, for onerous acts, bad faith by both the debtor and the third party is required. The defence to an Actio Pauliana must therefore rely on the non-verification of at least one of the mentioned requirements.

5.1 What are the duties of directors and managers?

The court may declare insolvency as culpable if, within three years prior to the commencement of insolvency proceedings, de iure or de facto directors perform certain prohibited acts. These include:

• Asset mismanagement. Destroying, concealing, or disposing of company assets for personal or third-party gain.
• Artificial financial manipulation. Creating or worsening liabilities, reducing profits, or engaging in ruinous transactions for personal benefit.
• Unfair transactions. Buying goods on credit and reselling at significantly lower prices before obligations are met.
• Misuse of company resources. Using company credit or assets against its interests, especially to favour related entities.
• Loss-making operations. Pursuing operations likely to lead to insolvency for personal or third-party benefit.
• Accounting irregularities. Failing to keep organised accounts, maintaining fictitious or double accounts, or committing serious irregularities.
• Non-cooperation. Repeatedly failing to cooperate with the Insolvency Administrator.

Presumption of gross negligence applies when directors fail to:

• file for insolvency in due time; or
• submit annual accounts within the legal deadline.

5.2 What claims can be brought against directors and managers arising from breaches of those duties?

The performance of any of the actions listed in Question 5.1 may trigger proceedings within the insolvency process, potentially resulting in the director or manager being held liable for the company’s insolvency.

Liability is usually civil and determined by the court, with possible consequences including:

• prohibition from managing third-party assets for a period of two to ten years;
• prohibition from serving as a board member of any company, association or foundation, public company, and cooperative for two to ten years;
• loss of any claims against the insolvency or on the insolvency estate; and
• compensation to the company’s creditors up to the maximum amount of the unsatisfied claims.

5.3 Who can pursue the claims?

Claims can be pursued directly by the court (ex officio) (Article 36(1) i) of CIRE), by the insolvency administrator, or at request of any interested party (Article 188(1) of the CIRE).

5.4 Do directors have, at any time, a strict obligation to file for insolvency and, if so, when does that arise?

Directors have a duty to file for insolvency within 30 days of becoming aware of the insolvency situation of the company (Article 18 of the CIRE). Failure to comply with this duty may result in directors being held liable for the insolvency.

5.5 Can directors and managers be found liable for the increase in sums owed to creditors after a company becomes insolvent?

Directors and managers may be held liable for any increase in sums owed to creditors under the rules on culpable insolvency, and such claims can be pursued within the insolvency proceedings.

As a general rule, once insolvency is declared, directors and managers are deprived of their administrative powers, except for their duty to cooperate with the insolvency administrator. Consequently, they should not be in a position to further aggravate the creditors’ situation after the company becomes insolvent.

5.6 In what other circumstances can directors and managers be found liable directly to creditors of the company?

Directors and managers can be found liable under the general civil tort and contractual liability, and also under the applicable tax law.

Article 83 of the CIRE imposes on the debtor a duty of appearance and cooperation. In this regard, and under paragraph 1, the debtor must provide all information relevant to the proceedings that is requested by the insolvency administrator, the general meeting of creditors, the creditors’ committee, or the court.

6.1 What information can be obtained by office holders in respect of a debtor’s property, information, and affairs?

Office holders (in particular, the insolvency administrator, in a supervisory role, the creditors’ meeting, and creditors’ committee) may obtain all information that is relevant for identifying, preserving, valuing, and realising the debtor’s assets and for assessing the debtor’s business and financial situation. This typically includes:

• Information on assets and liabilities:
  • full list and location of assets (real estate, movable assets subject to registration, shareholdings, intellectual property, receivables, and other rights); and
  • encumbrances, securities, and guarantees over those assets, as well as existing enforcement proceedings or attachments.
• Accounting, financial, and business information:
  • accounting records, financial statements, management reports, bank account information, tax returns, and social security data; and
  • main commercial contracts (leases, supply, distribution, financing, guarantees, intra-group agreements) and information on group relationships and related-party transactions.
• Transactional and historical information:
  • significant past transactions, especially those that may be subject to avoidance (claw-back) or challenge (e.g. transactions at an undervalue, preferential payments, atypical related-party dealings); and
  • information on ongoing litigation and contingent liabilities.

6.2 How is that information obtained in practice?

In practice, office holders obtain this information through a mix of voluntary cooperation and formal information requests, relying on the duties imposed by the CIRE:

• From the debtor and its management:
  • the insolvency administration summons the debtor (or its directors) and requests delivery of accounting records, bank information, corporate documentation and explanations, all invoking Article 33(3) and Article 83 of the CIRE; and
  • management is typically questioned about assets structure, group relationships, recent transactions, and any missing or unaccounted assets.
• From the public authorities and registries:
  • requests for information to the tax authorities and social security regarding assessments, debts, declarations, and salary or contribution records; and
  • searches in the land, commercial, and vehicle registries to identify real estate, corporate interests and registered movable property. Especially through permanent and public certificates, which allow continuous and updated access to information on real estate, vehicles, or commercial entities (companies and associations), allowing verification of current registrations and pending requests, which is essential for transactions, purchases/sales, or to verify encumbrances, mortgages, owners, and other legal data.
• From financial institutions and other third parties:
  • requests to banks for bank statements, loan agreements, guarantees, and security documentation; and
  • contact with customers, suppliers, and key business partners to confirm credits, ongoing contracts, and operational dependencies.

6.3 Can the court assist in obtaining that information and how does that work in practice?

Yes, the court plays a central role in obtaining information when voluntary cooperation fails. In accordance with the rules of the CIRE and the articles of the Code of Civil Procedure, applicable under Article 17 of the CIRE when cooperation is incomplete or refused, the interested party may request the court’s assistance to compel disclosure or authorise more intrusive measures. In practice, it is to submit a formal request detailing the missing information and prior failed attempts to obtain it; the court then typically issues a deadline-bound order.

Foreign office holders benefit from EU-wide automatic recognition mechanisms under Regulation (EU) 2015/848 and, for non-EU cases, from general rules on recognition of foreign judgments under the CIRE and Civil Procedure Code (CPC), ensuring cooperation while respecting Portuguese public policy.

7.1 Is the UNCITRAL Model Law on Cross-Border Insolvency adopted?

No, Portugal has not adopted the UNCITRAL Model Law on Cross-Border Insolvency. Cross-border matters are governed by EU Regulation 2015/848 (for EU proceedings).

7.2. Is it possible to recognise office holders from other jurisdictions?

Yes, recognition is possible. EU main proceedings are automatically recognised. In accordance with Article 21(1) of Regulation (EU) 2015/848, the insolvency practitioner appointed by a court which has jurisdiction pursuant to Article 3(1) may exercise all the powers conferred on it, by the law of the state of the opening of proceedings, in another Member State, as long as no other insolvency proceedings have been opened there and no preservation measure to the contrary has been taken there further to a request for the opening of insolvency proceedings in that state. Additionally, the insolvency practitioner appointed by a court which has jurisdiction pursuant to Article 3(2) may in any other Member State claim through the courts or out of court that moveable property was removed from the territory of the state of the opening of proceedings to the territory of that other Member State after the opening of the insolvency proceedings. The insolvency practitioner may also bring any action to set aside which is in the interests of the creditors. In exercising its powers, the insolvency practitioner shall comply with the law of the Member State within the territory of which it intends to take action, in particular with regard to procedures for the realisation of assets. Those powers may not include coercive measures, unless ordered by a court of that Member State, or the right to rule on legal proceedings or disputes; non-EU proceedings require judicial exequatur under CPC Articles 978 et seq. and CIRE conflict rules.

7.3. What is the process and what are the conditions for recognition?

EU proceedings

Automatic under Article 20 of Regulation (EU) 2015/848 once the opening decision is publicised; no separate application needed, but local effects apply directly.

Non-EU proceedings

Application to the Court of Appeal for exequatur (CPC Articles 978–985) requires: finality of foreign decision, proper jurisdiction (e.g. debtor’s centre of main interests), due process, reciprocity, and compatibility with Portuguese public policy. Documents include apostilled judgment, translation, and proof of service.

7.4 What information can be obtained by office holders in respect of a debtor’s property, information, and affairs?

Office holders can generally obtain very wide-ranging information about a debtor’s property, financial position, and business affairs, subject to limits of relevance, privilege, and confidentiality. To this end, they may make use of national registers and request access to them, namely by permanent certificates.

7.5 What steps can a foreign office holder take to recover assets belonging to the debtor?

In accordance to Article 21 (2) of Regulation (EU) 2015/848 the insolvency practitioner appointed by a court which has jurisdiction pursuant to Article 3(2) may in any other Member State claim through the courts or out of court that moveable property was removed from the territory of the state of the opening of proceedings to the territory of that other Member State after the opening of the insolvency proceedings. The insolvency practitioner may also bring any action to set aside that is in the interests of the creditors.

On the other hand, the office holder can always benefit from the specific recognition and enforcement procedures provided for in CIRE, namely Articles 288–294, and those provided for in Regulation (EU) 2015/848.

7.6 Is a foreign office holder able to bring clawback claims or fraudulent transaction claims?

Yes, a foreign office holder may file recovery claims (revocatory actions) and claims for fraudulent transactions (Pauliana actions), provided that the foreign proceedings have been recognised in Portugal by the competent court pursuant to Articles 288 et seq. of the CIRE.

8.1 Can a foreign office holder take appointments?

No, because only judicial administrators who are included in the official lists of judicial administrators may be appointed, pursuant to Article 13 of Law No. 22/2013 of 26 February, which establishes the status of judicial administrators.

8.2 What are the conditions for becoming an office holder?

Under the terms of Article 3 of Law No. 22/2013 of 26 February, judicial administrators may be persons who cumulatively:

• hold a bachelor’s degree and possess professional experience appropriate to the exercise of the activity;
• attend a professional internship promoted for that purpose;
• obtain approval in an admission examination specifically organised to assess the knowledge acquired during the internship period;
• are not subject to any incompatibility situation for the exercise of the activity; and
• are persons of good standing suitable for the exercise of the activity of judicial administrator.

For these purposes, a bachelor’s degree and professional experience appropriate to the exercise of the activity shall be deemed to be those which, when considered jointly, attest to the candidate’s basic training and experience in the generality of the subjects covered by the admission examination.

8.3 What are the main rules of professional conduct?

The core rules governing the judicial administrator include independence and impartiality with regard to the debtor, creditors, and third parties; a prohibition on conflicts of interest, whereby the appointee may not accept the role if they maintain relevant personal, professional, or economic ties to the debtor or principal creditors; and a duty of confidentiality with respect to information obtained in the exercise of the office. In addition, the judicial administrator is bound by duties of diligence, transparency, and loyalty towards the court and creditors, which encompass the obligation to justify acts of management of the insolvency estate, render accounts, act with promptness and efficiency, and comply with applicable legal and regulatory standards, under pain of civil, disciplinary, and — in serious cases — criminal liability.