Last chance to business recovery

The Special Revitalisation Procedure (Processo Especial de Revitalização – PER) integrates the set of strategic measures undertaken by the government for the revitalisation and restructuring of companies, and aims to improve the conditions for the recovery of companies in difficulty, which have seen their economic and/or financial structure deteriorate, but which still have potential viability.
PER is a special process created in the Code of Insolvency and Corporate Recovery (CIRE) intended to enable any debtor who is in economic difficulties or impending insolvency, but still has the potential to recover, to establish negotiations with the respective creditors and reach an agreement leading to its economic revitalisation.
PER is initiated by the debtor and at least one creditor through a written declaration, stating the beginning of negotiations that may lead to the revitalisation of the debtor through the adoption of a recovery plan. This declaration must be signed by all declarants with the date of signature.
With that declaration, the debtor must immediately communicate to the court competent to declare the insolvency that it intends to begin negotiations leading to its recovery. At that time, the debtor must also submit to the court copies of several documents, such as a list of all the creditors; a list of all the pending actions; a list of assets; annual accounts of the last three exercises; map of staff.
After receiving the declaration, the judge appoints a temporary judicial administrator, which prevents the presentation of any debt recovery actions against the debtor and, during the time of the negotiations, the current actions remain suspended. The judicial actions are extinct as soon as the recovery plan is approved and ratified, unless it provides for its continuation.
Once notified of the appointment of the temporary judicial administrator, the debtor communicates, immediately and by registered post, to all creditors that have not signed the initial declaration, that negotiations for its revitalisation have began, inviting them to participate in the ongoing negotiations. In the same communication, the debtor is obliged to inform its creditors that the documentation accompanying the declaration is available at the court for consultation.
The creditors who choose to participate in the ongoing negotiations must declare this to the debtor by registered letter, and may do so for as long as the negotiations continue.
Every creditor has 20 days from the publication of the appointment of the temporary judicial administrator to claim credits, and the temporary judicial administrator, within five days, must draw up a provisional list of credits. If the provisional list of credits is not contested it automatically becomes the final list.
The negotiations must be completed within two months, although the period for negotiations may be extended just once and for a month, through written agreement between the judicial administrator and the debtor.
The conclusion of the negotiations that led to the approved recovery plan must be signed by all and immediately sent to the court for approval or refusal by the judge.
If it is not possible to reach an agreement, or if the deadline is exceeded, the negotiation process is terminated. If the debtor is not yet insolvent, the end of the special process of revitalisation cancels all obligations and agreements established. If the debtor is already insolvent, the end of the process involves the debtor’s insolvency being declared by the judge within three days.
The end of the special process of revitalisation without an agreement leading to the revitalisation of the debtor disqualifies the debtor from using the same process for a period of two years.
By Dr. Eduardo Serra Jorge
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Dr Eduardo Serra Jorge is founding member, senior partner and CEO of lawyers firm Eduardo Serra Jorge & Maria José Garcia – Sociedade de Advogados, R.L., created in 1987.
In his column, he addresses legal issues affecting foreign residents in Portugal.
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