The events of the past few years have had a significant impact on the Portuguese economy and, consequently, on restructuring and insolvency activities. The deteriorating economic conditions caused by the financial crisis and felt in Portugal led the government to request external assistance from the International Monetary Fund, the European Commission and the European Central Bank (i.e., the Troika) in April 2011. As a result, a memorandum of understanding on specific economic policy was entered into between the Portuguese state and the Troika on 3 May 2011, according to which the quarterly disbursement of financial assistance to Portugal would depend on the implementation of a series of structural reforms by the government, inter alia, amendments to the Portuguese Insolvency and Restructuring Code, with a view to facilitate an effective restructuring of viable companies.

The overall financial difficulties felt by companies in Portugal - namely, due to the shortage of liquidity and access to financing for their activities - aggravated by the reforms imposed by the Troika, led to a considerable rise in insolvency and restructuring procedures as of 2008. In accordance with official data from the Portuguese Ministry of Justice, the overall increase of new insolvency proceedings filed between the fourth quarter of 2007 and the fourth quarter of 2013 corresponded to approximately 358.5 per cent.

Although the financial crisis is not considered to be over, and its effects are still very much felt by all market participants, 2014 appeared to have been a turning point for the Portuguese economy and the country's restructuring and insolvency activities. It was the year that the Troika ‘left' Portugal and, in accordance with a study performed by Cosec, the number of insolvency proceedings filed in 2014 decreased 33 per cent when compared with the number of proceedings filed in the previous year, corresponding to a total of 4,019 filings.2

The most recent data shows that this positive trend was maintained throughout the last year. Indeed, in accordance with the study Economic Insight 2016-17: Tectonic shifts and risk of local tremors,3 although the year 2016 ended with an increase of 1 per cent in insolvencies world-wide, the number of insolvency proceedings filed Portugal that year decreased 18 per cent.4

In addition, as of the closing of the first quarter of 2017, and in accordance with a study performed by Cosec, 839 companies were declared insolvent, which represents a fall in 20 per cent in the number of new proceedings when compared with the first quarter of 2016.5


i Insolvency and restructuring procedures

The insolvency and restructuring procedures available in Portugal are governed by the Portuguese Insolvency and Restructuring Code approved by Decree-Law No. 53/2004, of 18 March, as amended (CIRE) and by Decree-Law No. 178/2012 of 3 August, recently amended by Decree-Law No. 79/2017 of 30 June.

Portuguese law currently establishes four different insolvency and restructuring procedures: an insolvency procedure, a special revitalisation procedure, a special payment agreement procedure and a system of extrajudicial recovery of undertakings.

CIRE provides for a single main insolvency proceeding (called processo de insolvência), the main purpose of which is to obtain payment for the insolvent's creditors through the implementation of an insolvency plan or, should that prove to not be possible, through the liquidation of the insolvent's estate and subsequent distribution of the proceeds among the creditors.

In general, a debtor is deemed to be insolvent when it is unable to perform its overall obligations as they fall due or when its liabilities significantly exceed its assets (over-indebted balance sheet). Insolvency proceedings may, thus, be initiated, inter alia, in the following circumstances:

    • a dissipation of the debtor's assets;
    • b the debtor's failure to pay, within a six-month period prior to the filing for involuntary insolvency, its tax liabilities, social security obligations, wages, or any rent, lease or instalment relating to the purchase or loan obtained to acquire the company's premises;
    • c if the debtor is a company and its liabilities clearly exceed the company's assets, in reference to the last approved balance sheet (the above-mentioned over-indebted balance sheet); or
    • d when there is a delay of at least nine months in approving the company's annual financial statements.

Insolvency proceedings may be filed by the debtor, any of its creditors (regardless of the nature of the credit), any person who is responsible for the debtor's liabilities or the public prosecutor. In this respect, it should be noted that the directors of a company have the legal duty to file for insolvency within 30 days from the date on which they become aware of, or should have become aware of, an insolvency situation, as further explained below.

The commencement of insolvency proceedings has an impact on the debtor, pending legal procedures, and the ongoing business and credits owned by the insolvent. As of the declaration by the court of the insolvency of a debtor, the insolvent will be controlled by an insolvency administrator appointed by the court who, as a general rule, will be responsible for managing the insolvent's estate, and will be entitled to carry out any acts and be involved in any transactions within the ordinary course of business, with the exception of specific acts of material relevance, which require the creditors' prior consent. In addition, although the directors of the company remain in office, and must cooperate with the insolvency administrator, the creditors' general meeting, the creditors' committee and the court, they do so with limited powers and without receiving any compensation for the performance of their duties, and may resign upon submission of the annual financial statements of the company. Notwithstanding, in specific cases, the directors of the insolvent company may continue to exercise active management functions under the insolvency administrator's supervision.

On the other hand, from the moment of the declaration of insolvency, creditors may only satisfy their credit within the scope and by means of the insolvency proceedings by lodging their claim with the insolvency administrator within the specific term set by the court for this purpose (up to 30 days); thus, the filing or continuation of any enforcement proceedings filed by insolvency creditors against the insolvent are halted, and the insolvent's obligations are accelerated to maturity.

It should also be noted that Portuguese law establishes specific rules with regard to the classes of credits and the ranking of claims:

  • a claims over the insolvent's estate (for instance, court fees, the insolvency administrator's fees, the costs and expenses of the insolvent estate's management or liquidation, or both, and debts or claims resulting from obligations incurred under contracts entered into by the insolvent company after the declaration of insolvency), which are ranked above any other and are to be paid first, usually, with the proceeds resulting from the insolvency administrator's activity;
  • b secured claims, which comprise secured credits (typically by a mortgage or pledge) and claims for credits with special legal privileges (e.g., certain employee and tax claims), which have priority over the proceeds of the sale of the assets to which they are linked;
  • c privileged claims (i.e., claims protected by general legal privileges, which are usually granted to ensure tax and social security collection, and have priority over common and subordinated claims);
  • d common claims (i.e., unsecured, unprivileged and unsubordinated credits, which are satisfied on a pro rata basis once those claims referred to above have been paid); and
  • e subordinated claims, which are only paid after all other creditors have been satisfied in full (namely, credits of creditors with a special relationship with the debtor, e.g., directors, shareholders, and interest due after the declaration of insolvency).

The Portuguese Supreme Court recently rendered two important decisions with direct impact to the ranking of claims, having harmonised its case law with regard to employees and promissory buyers' secured credits.

On the one hand, the Portuguese Supreme Court recently decided that the properties built by a construction company within its commercial activity (i.e., the intent to sell it) are excluded from the special legal privilege over the employer's property granted to labour credits under Portuguese labour law. Said credits will not, therefore, be ranked as secured claims.6

On the other hand, the Portuguese Supreme Court decided that the retention right over the promised property granted to promissory buyers - that prevails over mortgages registered beforehand - is only granted to promissory buyers that are consumers.7

As referred to above, the insolvency proceedings' main purpose is to obtain payment for the insolvent's creditors through the implementation of an insolvency plan. Thus, in the course of the proceedings, the creditors' general meeting may resolve on the approval of an insolvency plan that, upon approval by the court, binds all creditors, including those who have voted against it or who have not attended the meeting. In order for the insolvency plan to be approved, the following quorums must be met: at least one-third of the creditors with voting rights must attend (or be duly represented in) the relevant meeting; more than two-thirds of the votes cast therein must endorse the approval of the plan; and more than half of the votes cast must be issued by unsubordinated creditors. Once approved by the creditors, the plan needs to be affirmed by the court before producing effects over all creditors.

In this regard, CIRE does not contain specific provisions on which measures may be set out in an insolvency plan, and thus the creditors are free to choose any such measures. Accordingly, the plan may, for instance, set out a reduction or waiver of debts; condition the satisfaction of the debts on the insolvent's availability; impose the granting of securities by the insolvent company; and determine the sale of assets to creditors. In addition, unless otherwise provided for in the insolvency plan, the rights arising from securities in rem or credit privileges are not affected by the insolvency plan, subordinated credits are deemed waived and, upon fulfilment of the insolvency plan, the insolvent company is deemed discharged of its residual obligations.

If, however, the approval of an insolvency plan is not feasible, the payment of the insolvent's creditors will be assured through the full liquidation of the insolvent's estate and subsequent distribution of the proceeds among them.

The closing of the insolvency proceeding will be ordered by the court, inter alia, in the following cases:

  • a after the final allotment of assets, upon registration of which the company will cease to exist;
  • b when the court ruling that affirmed the insolvency plan has the force of res judicata (unless if otherwise provided therein);
  • c upon request of the insolvent, when the insolvency situation ceases or all creditors consent to closing the proceedings; or
  • d when the insolvency administrator concludes that the insolvent's estate is insufficient to pay the court costs and the remaining debts of the insolvent's estate.

On the other hand, the pre-insolvency procedure called the ‘special revitalisation procedure' was implemented in 2012, and was recently significantly amended,8 with the aim of establishing a formal legal framework for companies in financial distress to negotiate a recovery plan with their creditors (which comprises any measure of debt relief). This procedure thus aims to resolve situations of severe economic and financial difficulty, or near-insolvency situations, through the approval of a recovery plan by the creditors.

Pursuant to the amendments recently enacted, in order to be eligible to use this procedure, the debtor must file a statement subscribed by a certified accountant or statutory auditor, whenever applicable, certifying that the debtor is not in a current state of insolvency.

The special revitalisation procedure is initiated by the debtor, together with at least one of its creditors, which cannot be a specially related party and must hold at least 10 per cent of the unsubordinated credits, by submitting to the court a statement of their intention to negotiate a recovery plan. Pursuant to the recent amendments, the said statement of intention to negotiate a recovery plan must be filed together with a proposal of the recovery plan, as well as a description of the company's patrimonial, financial and credit situation.

All creditors are invited to participate in the negotiation of the recovery plan, which takes place in an out-of-court context and lasts for a maximum period of three months. During this phase, a grace period is granted to the debtor, since the creditors are not entitled to request the court to declare its insolvency and all pending legal proceedings envisaging debt collections are halted. After being approved, under the same terms and with the same majorities as the insolvency plan as provided above, and being affirmed by the court, the recovery plan is binding on all creditors, even if they did not participate in the negotiations.

The amendments recently enacted to the ‘special revitalisation procedure' limited its scope of application to companies, and therefore, a special payment agreement procedure was created. Said procedure is applicable to legal persons that are not companies, as well as natural persons, provided that they are ‘a difficult economic situation or in a situation of imminent insolvency'.

The aim of this procedure is to establish negotiations with the creditors in a simple and efficient form, with the view of creating the necessary conditions for the entering into payment agreements that allow the recovery of the debtor.

In general terms, the legal regime of this new special payment agreement procedure is very similar to that of the special revitalisation procedure regime.

Finally, Portuguese law also provides for a ‘system of extrajudicial recovery of undertakings' (SIREVE), enacted by Decree-Law No. 178/2012 of 3 August. This is an out-of-court procedure, the goal of which is to promote the extrajudicial recovery of undertakings, creating conditions for an agreement to be negotiated by the undertaking and its creditors that represent at least 50 per cent of the total amount of the company's debt, and that make the recovery of the undertaking's financial situation viable. Such agreement may comprise the application of any means of debt relief. Contrary to the special revitalisation procedure, the SIREVE is conducted by the Institute for Assistance to Small and Medium-sized Companies and Innovation (IAPMEI).

SIREVE's scope of application is limited to companies and sole traders with organised accounts that are now in a difficult economic situation or a situation of imminent insolvency, and obtain an overall positive assessment of certain financial indicators, under the new mandatory prior analysis carried out through a IAPMEI platform.

The recovery plan within the SIREVE is considered to be approved if it is voted on by creditors whose claims represent at least one-third of the company's total debts, receives favourable votes from more than two-thirds of all the votes cast and more than half of the votes cast correspond to unsubordinated claims, not considering abstentions; or it receives favourable votes of creditors whose claims represent more than half of the company's total debts and more than half of these votes correspond to unsubordinated claims, not considering abstentions.

In addition, in the event of insolvency, creditors that during the proceedings finance the debtor's activities by providing capital for its recovery are entitled to general preferential claims granted to employees, and the guarantees agreed between the debtor and its creditors during the procedure to provide the debtor with the financial means necessary to pursue its business activity shall remain in place for a period of two years even if, at the end of the procedure, the company is declared insolvent or it initiates a new restructuring process.

On the other hand, the measures set out in the recovery plan approved within the SIREVE also benefit from the application of fee and tax relief provided for in the CIRE.

Finally, the amendments introduced by Decree-Law No. 26/2015 establish that once the agreement is signed, enforcement proceedings brought against the company or against its guarantors, or both, are automatically extinguished, and the proceedings aimed at obtaining the payment of credits brought against the company or its guarantors, or both, remain halted, due to prejudice. However, this measure is exclusively applicable to creditors that have signed the agreement.

ii Duties of directors of companies in financial difficulties

As referred to above, the managers and directors (including shadow or de facto directors) of a company have the legal duty to file for insolvency within 30 days from the date on which they become aware of, or should have become aware of, an insolvency situation. Directors who breach this legal duty may be subject to civil and criminal penalties. For this purpose, there is a legal assumption of serious fault should the directors fail to apply for insolvency within 30 days of the moment when the company was de facto insolvent, or fail to draft and submit yearly accounts for the company.

Furthermore, the insolvency may be classified as culpable or fortuitous when the situation was created or aggravated as a result of the conduct (with dolus or with gross negligence) of the debtor or of its directors, in law or in fact, in the three years preceding the commencement of the insolvency proceedings. Notwithstanding, an insolvency is always classified as culpable when the managers or directors of the insolvent company debtor have:

  • a destroyed, damaged, hidden or made disappear all or part of the debtor's assets;
  • b artificially created or aggravated damages or liabilities, or reduced profits, causing, in particular, the execution by the debtor of ruinous contracts for the benefit of the debtor's directors or people specially related with them (which includes the spouses, descendants or siblings of directors);
  • c purchased goods on credit, reselling them or delivering them in payment for substantially less than the current price before satisfying the obligation towards the credit lender;
  • d used the debtor's assets for personal benefit or for the benefit of third parties;
  • e exercised under the guise of the legal personality of the company an activity for personal benefit or for the benefit of third parties, and to the detriment of the company;
  • f used the credit or assets of the debtor for personal benefit or for the benefit of third parties and to the detriment of the company, in particular to promote another company in which they have direct or indirect interests;
  • g for personal benefit or for the benefit of third parties, kept managing the debtor with negative results, despite knowing or having ought to have known that this would likely lead to the insolvency of the debtor;
  • h failed to comply with the obligation to keep proper account of the debtor, maintained a fictitious accounting of the debtor or committed a fault jeopardising the chance of understanding the financial situation of the debtor; or
  • i repeatedly violated their obligations to be at court when duly summoned and to cooperate with the insolvency proceedings.

When the insolvency situation is deemed to be caused by the directors' mismanagement, the court may:

  • a declare their incapacity to manage any third party's estate for a given period;
  • b prevent the persons held liable from performing commercial activities for a given period, including as a member of the board of directors of any company;
  • c order that these persons may not be considered as creditors of the insolvent company or of the insolvent's estate, and require them to return to the insolvent's estate any amount already received; and
  • d sentence the directors to indemnify creditors up to the amount of their unpaid credits.

In addition, it should be noted that, under extreme circumstances, directors may be subject to criminal penalties if they have, in any way, defrauded creditors or fraudulently contributed to the insolvency of the company, or both.

iii Clawback actions

According to the CIRE, several types of transactions may be challenged by the insolvency administrator once insolvency proceedings have been commenced. All acts that may be qualified as detrimental to the insolvent's estate, such as acts that diminish, frustrate, hinder, endanger or withhold the satisfaction of the insolvency creditors, performed within two years prior to the beginning of the insolvency proceedings, may be subject to clawback.

In general, the termination of said transactions is only possible if the counterparty acted with wrongful intent (i.e., at the date the act was performed, knowledge that the debtor was in an insolvent situation; knowledge of the prejudicial nature of said act to the debtor's situation and that the insolvency situation was imminent; or knowledge that the insolvency proceeding had already been initiated). For this purpose, Portuguese law provides for a rebuttable presumption of wrongful intent if the transaction takes place within the two years prior to the commencement of the insolvency proceedings and it involves any parties related to the insolvent.

Notwithstanding, the following acts, inter alia, may be subject to clawback regardless of any other requirements:

  • a gratuitous acts performed within two years prior to the commencement of the insolvency proceedings;
  • b granting of in rem security to preexisting credits or to other credits that replace them within the six-month period prior to the commencement of the insolvency proceedings;
  • c granting of personal guarantees or of credit mandates within the six-month period prior to the commencement of the insolvency proceedings that relate to transactions without any real benefit to the debtor; and
  • d reimbursement of shareholders' loans made during the year before the beginning of the insolvency proceeding.

In any case, the termination of the referred transactions must be invoked by the insolvency administrator, by means of a registered letter with notice of receipt, within six months counted from knowledge of the act, or two years counted from the judicial declaration of insolvency. Should the insolvency administrator decide not to exercise the clawback, any creditor may resort to an actio Pauliana.

Finally, pursuant to the recent enacted amendments, CIRE expressly sets forth that certain transactions, such as those entered into in the context of a special revitalisation procedure, a special payment agreement, a SIREVE and the adoption of resolutions measures foreseen in the General Regime of Financial Institutions,9 are not subject to clawback actions.


The most recent legislative developments pertaining to insolvency and restructuring relate to the above-mentioned special revitalisation procedure.

Although until 2012 the main goal of insolvency proceedings under Portuguese law was to obtain payment for the insolvent's creditors through the most efficient approach, the enactment of Law No. 16/2012 clearly intended to favour the approval of an insolvency plan with the main purpose of recovering the insolvent company.

To facilitate this goal, and in the context of the ‘Programme to Capitalize' - a programme to support the capitalisation of companies, investment and relaunch of the economy, approved by the Resolution of the Council of Ministers No. 42/2016, of 18 August - Decree-Law No. 79/2017, of 30 June was recently enacted, significantly amending the special revitalisation procedure.10

The most relevant amendments to the special revitalisation procedure are as follows:

  • a the special revitalisation procedure is now only applicable to companies, while other legal persons and natural person are subject to the new special payment agreement procedure;
  • b the initial application for a company to be subject to a special revitalisation procedure now has to be accompanied by:

• a statement signed by a certified accountant or statutory auditor, issued no more than 30 days, attesting that the company is not in current insolvency; and

• a proposal for a recovery plan accompanied by at least a description of the company's patrimonial, financial and credit situation;

  • c until now, the special revitalisation procedure could be initiated by the debtor together with any of its creditors; following the amendments enacted, the procedure must now be initiated by the debtor with at least one of its creditors that must hold at least 10 per cent of the unsubordinated claims and cannot be a specially related party;
  • d it is expressly set forth that the special revitalisation procedures of commercial companies in a control or group relationship may be joined into one;
  • e with the appointment of the provisional judicial administrator, the limitation periods applicable to the company are suspended and the provision of essential public services, such as, water supply service, electric power supply service, etc., cannot be suspended for as long as the negotiations continue;
  • f following the amendments enacted, any creditor can, within five days of the publication of the recovery plan in the Citius portal, file a petition alleging the circumstances that he or she considers likely to lead to the same not being approved, the debtor being allowed to amend the plan accordingly; and
  • g following the amendments enacted, the debtor cannot submit a new recovery plan within two years of the approval of the previous recovery plan, unless the company demonstrates that it has fully implemented the previous plan or that the need to submit a new plan is driven by factors unrelated to the previous plan or by supervening and extraneous circumstances.

On the other hand, Decree-Law No. 79/2017, of 30 June also introduced amendments to the insolvency procedure, of which the following are highlighted:

  • a with regard to the appointment of the insolvency administrator, in the case of a commercial company in a control or group relationship with other companies in respect of which insolvency proceedings have been proposed, the court may, at its own discretion or pursuant to a petition filed by the debtor or the creditors, appoint the same insolvency administrator for all companies, in which case he or she shall also nominate, in general terms, another insolvency administrator with duties limited to the assessment of claims claimed among debtors of the same group;
  • b with regard to the appointment of a provisional judicial administrator, in addition to situations in which management acts requiring special knowledge are foreseeable, the court may take into account any proposal that may be made in the petition of the debtor, when it is in a control or group relationship with other companies whose insolvency has been sought and the appointment of the same administrator in the various proceedings; and
  • c CIRE now sets forth that certain transactions, such as those entered into in the context of a special revitalisation procedure, special procedure for a payment agreement, SIREVE and the adoption of resolutions measures foreseen in the General Regime of Financial Institutions,11 are not subject to clawback.


In the past couple of years, Portugal has seen several high-profile restructuring cases, of which the landmark case is directly related to the crisis in Group Banco Espírito Santo and Group Espírito Santo Financial Group.

On 3 August 2014, after a succession of events, the Bank of Portugal applied a resolution measure to Banco Espírito Santo in the form of the transfer to a bridge bank created for such purpose (Novo Banco). Banco Espírito Santo was a major Portuguese bank and part of one of the biggest economic groups in Portugal, holding interests across several sectors (namely the insurance, real estate, tourism, health, agriculture and energy sectors). This crisis led to the filing of several insolvency and restructuring proceedings regarding a number of companies within the Banco Espírito Santo and Grupo Espírito Santo group, both nationally and internationally.

In effect, in late 2014, five Grupo Espírito Santo companies with head offices in Luxemburg were declared insolvent, albeit having requested to be subject to controlled management: Espírito Santo Control, the holding company of the entire group), Espírito Santo International, Rioforte, Espírito Santo Financial Group and Espírito Santo Financière.

In Portugal, the first company of the group to be subject to a restructuring procedure was Espírito Santo Irmãos, SGPS, SA, which initiated a special revitalisation procedure in 2014. The special revitalisation procedure was not successful, and the company was declared insolvent. Subsequently, Espírito Santo Financial (Portugal), SGPS, SA was also declared insolvent.

As a direct consequence of the group's crisis, Hotéis Tivoli, SA and Marinotéis, SA, which own 14 hotels in Portugal and Brazil, were not able to sell their properties and had to file for a special revitalisation procedure. Most recently, Espírito Santo Hóteis, SA, which initiated a special revitalisation procedure that was not successful, was also declared insolvent.

On 13 July 2016, the European Central Bank revoked BES's banking licence, thus, and according to the applicable legislation, the bank was placed into liquidation. In effect, pursuant to Decree-Law No. 199/2006 - which regulates the liquidation procedures of Portuguese credit institutions - the withdrawal of BES's banking licence produces the effects of the declaration of insolvency, which procedure is subject to the provisions of said Decree-Law.

Furthermore, following the failed attempt by Banif's shareholders and its board of directors to sell the bank and a succession of events, the Portuguese government and the Bank of Portugal decided to sell Banif's business and most of its assets and liabilities to Banco Santander Totta. The sale was carried out in the context of a resolution measure, similar to that applied to BES, and is expected to also culminate in Banif's liquidation, pursuant to the its banking licence being revoked.

Most recently, due to the difficulties felt in the past few years in the construction sector, both in locally and internationally, several companies have implemented restructuring measures. Following the application for a special revitalisation procedure by Opway, a construction company formerly part of the BES group, several companies of the Soares da Costa construction group, one of the largest construction groups in Portugal, also filed for special revitalisation proceedings. More recently, four companies of the MSF construction group also initiated special revitalisation procedures.


As a Member State of the EU, Portugal is bound, as of 26 June 2017, by Regulation (EU) No. 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, which repealed EC Regulation No. 1346/2000.12

According to Regulation (EU) No. 2015/848, the proper functioning of the internal market requires that cross-border insolvency proceedings operate efficiently and effectively in order to avoid incentives for parties to transfer assets or judicial proceedings from one Member State to another, or seeking to obtain a more favourable legal position to the detriment of the general body of creditors (i.e., forum shopping).

Regulation (EU) No. 2015/848 is an update of EC Regulation No. 1346/2000. In short, the new Regulation:

  • a extends its scope of application to proceedings that promote the recovery and revitalisation of the debtor;
  • b strengthens the legal framework for cooperation and communication between the participants, namely between courts, and between courts and insolvency administrators;
  • c improves coordination between open insolvency proceedings regarding the same debtor or the same group in the event of proceedings in respect of companies that are part of a group;
  • d gives priority to the concentration of efforts in the main proceedings, allowing the judge to halt the opening of secondary proceedings if it is shown that the rights of the local creditors are ensured; and
  • e increases the publicity of insolvency through the insolvency registers by the Member States and their respective interconnection.

In this respect it should be noted that, although council regulations are automatically binding on Member States at the equivalent level of domestic law, Portugal has also implemented EC Regulation No. 1346/2000 through the enactment of Articles 271 to 274 of CIRE.

Pursuant to Article 271 of CIRE, whenever the insolvency proceedings uncover the existence of a debtor's assets located in another Member State of the EU, the judgment declaring the insolvency of the debtor shall state the factual and legal reasons that justify the jurisdiction of the Portuguese courts. In line with this article, it should be noted that Article 3 of Regulation (EU) No. 2015/848 (equivalent to Article 3 of the EC Regulation No. 1346/2000) sets forth that:

[…] the courts of the Member State within the territory of which the centre of the debtor's main interests is situated shall have jurisdiction to open insolvency proceedings (‘main insolvency proceedings'). The centre of main interests shall be the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties.

Furthermore, Articles 275 to 296 of CIRE provide for rules of private international law intended to resolve conflicts of law in respect of insolvency matters, which are only applicable provided that they do not contradict the provisions of the EC Regulations.

On the other hand, the recognition and enforcement of foreign insolvency judgments depends on the awarding country. Thus, any judgment declaring the insolvency handed down by a court of a Member State that has jurisdiction pursuant to Regulation (EU) No. 2015/848 shall be recognised in all other Member States from the time that it becomes effective in declaring state. Outside the EU, the recognition and enforcement of a foreign insolvency judgment in Portugal requires a special exequatur procedure to be initiated, which shall be granted, provided that:

  • a there are no doubts regarding the authenticity of the document;
  • b the judgment is final in the awarding country and is not subject to any appeal;
  • c the jurisdiction of the country that issued the judgment was not fraudulently created and the subject matter is not of the exclusive jurisdiction of Portuguese courts;
  • d there are no lis pendens or res judicata exceptions due to cases filed in Portugal, except if the foreign court anticipated jurisdiction;
  • e the defendant was duly served, and the principles of defence and equality duly observed; and
  • f the judgment does not offend the international public policy principles of Portugal.

Finally, it should be noted that the UNCITRAL Model Law on cross-border insolvency has not been adopted in Portugal.


Notwithstanding the recent legislative amendments referred to above, further amendments are expected shortly.

In effect, the government has already announced that it wishes to implement an extrajudicial regime for the recuperation of companies, by means of which a debtor may enter into negotiations with all or some of its creditors with a view of reaching an voluntary and, generally, confidential agreement aimed at its recovery. Once certain requirements have been met, the agreement shall have certain effects, namely, in what regards its tax treatment, as if it were approved in the context of a special revitalisation procedure. According to the Portuguese Minister of Justice, this new procedure may lead to the extinction of the SIREVE.

In what regards restructuring activity in Portugal, the number of insolvency proceedings is expected to decrease further in the next year, although we estimate that the size of the proceedings will increase. However, in light of the recent amendments to the restructuring procedure, namely, the special revitalisation procedure, we expect to see an increase in the number of restructuring procedures of Portuguese companies, in particular, in groups of companies - which procedures can now be evaluated jointly - specifically those in the banking and construction sectors as these sectors are very exposed to the Venezuelan and Angolan economies, which are currently going through severe crises.

1 David Sequeira Dinis is a partner and Nair Maurício Cordas is a junior associate at Uría Menéndez - Proença de Carvalho.

2 Available at www.dgpj.mj.pt/sections/siej_pt/destaques4485/estatisticas-trimestrais8927/downloadFile/file/Insolvencias_trimestral_20160127.pdf?nocache=1454070355.8.

3 Performed by Eurler Hermes Economic Research. Available at www.eulerhermes.com/mediacenter/Lists/mediacenter-documents/Economic-Insight-Tectonic-Shifts-And-Risk-Of-Local-Tremors-Oct2016.pdf

4 Available at www.cosec.pt/downloads/file287_pt.pdf.

5 Available at www.cosec.pt/downloads/file310_pt.pdf.

6 Decision dated 23 February 2016, proceedings No. 1444/08.5TBAMT-A.P1.S1-A.

7 Decision dated 19 May 2019, proceedings No. 92/05.6TYVNG-M.P1.S1.

8 The amendments were enacted by Decree-Law No. 79/2017 of 30 June.

9 Approved by Decree-Law No. 298/92, of December 31.

10 Amendments that entered into force on 1 July 2017.

11 Approved by Decree-Law No. 298/92, of December 31.

12 However, insolvency proceedings commenced prior to 26 June 2017 are still subject to EC Regulation No. 1346/2000.