Law No. 9/2025, of 22 December, approved the Corporate Recovery and Insolvency Code (CREI), establishing, for the first time, a structured insolvency and corporate recovery framework in Timor-Leste, aligned with international standards. The CREI applies to both legal entities and individuals owning companies and establishes a dual system based on either company recovery or asset liquidation, with the aim of satisfying creditors while prioritising business continuity whenever possible. The new regime emphasises recovery, simplification and reduced court intervention, creates the Recovery and Insolvency Office (BRI), and introduces mechanisms such as the Reorganisation and Insolvency Proceedings (PRI), creditor negotiation procedures and a cross-border insolvency regime. The CREI will enter into force 180 days after publication, subject to the approval of supplementary legislation.
Background
Law No. 9/2025, of 22 December, was published on 22 December 2025, approving the Corporate Recovery and Insolvency Code (Código de Recuperação de Empresas e Insolvência – CREI) and establishing, for the first time, a structured and systematic framework in this field.
This law emerges in the context of structural economic reforms, aiming to strengthen the trust of domestic and foreign entrepreneurs and investors, as well as to align Timor-Leste’s legal system with international standards, particularly in the context of accession to the World Trade Organisation and regional integration.
Scope of Application
The CREI applies to:
- Legal entities governed by private law that own companies, even if they are exclusively publicly owned.
- Individuals who own companies, even if they are not registered as such under the applicable registration rules.
- Unclaimed estate, if the author of the succession is an individual who owns a company.
- Debtors whose centre of main interests is located in national territory, that is, the place where the debtor habitually manages their interests in a manner recognisable to third parties.
Structure and objectives of the new regime
The CREI establishes a dual system based on two main pathways:
- Company recovery, where economic viability exists.
- Universal liquidation of assets, when recovery is not possible.
The central purpose of the recovery and insolvency process is to satisfy creditors, prioritising, whenever possible, the continuity of business operations.
Structural principles
The new regime is based on several key principles:
- Priority of recovery: the system prioritises restructuring solutions over liquidation, aligning with modern trends in insolvency law.
- Non-judicial proceedings: the role of the courts is significantly reduced, being reserved essentially for:
- Declaration and classification of insolvency.
- Approval of the recovery plan.
- Structural decisions regarding the process.
- Speed and simplification: the process is designed to be expeditious and simplified, using standardised forms and procedures.
- Second chance: a regime is established to allow for the discharge of remaining assets for individuals, promoting economic renewal.
New institutional model
One of the most innovative aspects of the CREI is the creation of a central administrative entity, the Recovery and Insolvency Office (Balcão de Recuperação e Insolvência – BRI):
- Responsible for managing and processing cases.
- Reduces direct court intervention.
- Incorporates recovery and insolvency administrators (Administradores de Recuperação e Insolvência – ARI), who ensure the technical conduct of the proceedings and may intervene from the preliminary phase, specifically as provisional administrators.
Key procedural mechanisms
The CREI introduces a set of relevant mechanisms:
- Reorganisation and Insolvency Proceedings (Processo de Recuperação e Insolvência – PRI) as a single procedure.
- Negotiation phase with creditors (NECRE), encouraging consensual solutions.
- Creditors’ meeting with a significant decision-making role.
- Structured liquidation of assets with proportional distribution (apportionment).
- Cross-border insolvency regime, reflecting the growing economic globalisation.
Next steps
The CREI will enter into force 180 days from its publication, subject to the approval of relevant supplementary legislation, including laws governing the Recovery and Insolvency Office, the Recovery and Insolvency Administrator, as well as the regime for organised corporate accounting.
