Written By: Maria de Athayde Tavares, Esq.
Athayde de Tavares, Pereira da Rosa & Associados
Due to the structural crisis of the economy,Portugalfelt the need for focusing and framing the loan contracts in the current situation and also finding new solutions and alternatives to the insolvency issues.
The changes, in force since 20th May, aim to provide a new emphasis on promotion of the recovery of the companies in pre-insolvency situation, focusing, whenever possible, on maintain the companies in a working state, before getting straight to the liquidation of its assets (witch was the previous legal approach).
Creditors and debtors are encouraged to analyze the company’s financial viability and decide jointly whether recovery or liquidation is appropriate, and in what terms.
- Reduction of legal deadlines aiming at a quicker and more efficient Insolvency proceeding.
- Simplifying the procedural formalities now managed electronically.
- Reinforcement of debtor’s responsibility on their insolvency situation.
- Intensification of Insolvency Administrator’s powers and better definition of its role and responsibilities.
- Better coordination between the Insolvency and Executive proceeding.
- New Special Revitalization Process, designed to define general principles of voluntary restructuring of loans, with the final purpose of the debtor’s recovery through debt renegotiation:
- It can be requested by the debtor in financial difficulties or in imminent insolvency situation, but still capable of recovery, or by any of its creditors, by means of a written statement of the debtor and at least one creditor, expressing the intention to start negotiations.
- If the creditors approve the payment plan presented by the debtor, they settle a period of “standstill” – preventing the introduction of any debt recovery lawsuits against the debtor and suspending ongoing lawsuits with the same purpose, these will be extinguished as soon as the payment plan is adopted and approved.
The new legal framework seeks to promote the recovery of insolvent companies, through renegotiation of debt or payment plans, facilitating access to these kinds of mechanisms both to creditors and debtors.
The purpose is to have a greater use of extrajudicial procedures for conciliation between the parties, as well as greater communication leading to negotiations and, therefore, avoiding liquidation of assets and closure of companies.
For more information about Athayde de Tavares, Pereira da Rosa & Associados, please visit www.atpr.eu or the International Society of Primerus Law Firms.