Company restructuring and insolvency

Updated in 07-04-2020

The current pandemic caused by the novel coronavirus has led to an increasing deterioration of the economic and financial context, at both national and international level, which is expected to aggravate the situation of many Portuguese companies, particularly as regards their cash flow, as a result of the increase in defaults, or at least the delay in meeting contractual obligations.

This may give rise to a significant increase in the number of companies making use of the judicial and extrajudicial mechanisms provided by Portuguese legislation for company restructuring, namely the Special Revitalisation Process (‘PER’) and the Extrajudicial Framework for Business Recovery (‘RERE’). It should be noted that, as explained in greater detail below, both PER and RERE allow debtors to enter into negotiations with their creditors, with a view to reaching an agreement which will enable recovery to take place.

Similarly, if the exceptional situation which we are currently experiencing persists, with the consequent worsening of the economic and financial profile of Portuguese business, a substantial increase is anticipated in the number of insolvency proceedings.

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