EMCC European Monitoring Centre on Change

Special Revitalisation Process (PER)

Portugal
Phase: Management
Type:
  • Rescue procedures in case of insolvency
Last modified: 10 September, 2020
Native name:

Processo Especial de Revitalização (PER)

English name:

Special Revitalisation Process (PER)

Coverage/Eligibility

This is available to natural or legal persons with economic difficulties or in imminent insolvency. However, all applicants must prove that they also meet certain conditions which will enable their economic recovery. More in detail, creditors must be provided with all the information needed to confirm the company's economic and financial viability, as well as the ability to comply with the restructuring agreement.

The PER can be applied to all kind of business entities, with the exception of: public entities; insurance companies; credit institutions; financial companies; investment firms and collective investment undertakings.

Main characteristics

The PER is part of the Revitalisation Programme (Programa Revitalizar) and is an alternative judicial instrument to insolvency, which gives companies in difficulty and/or facing imminent insolvency the possibility to negotiate with their creditors, leading to the revitalisation of their activity. Therefore, this does not apply to companies declared insolvent by a court of law, or after opening of insolvency proceedings. 

The instrument protects the productive capacity of the company and the jobs, by maintaining activity and providing for a suspension of creditors' debt recoveries during the negotiation process. The recovery plan is made viable by creditors.

The recovery plan is considered approved if (Decree-Law 84/2019 of 28 June, article 17F):
  • It is voted by creditors whose claims represent at least 1/3 of the total claims related to voting rights included in the list of credits referred to in paragraphs 3 and 4 of article 17D, of Decree-Law 84/2019 of 28 June; and it collects also the favourable vote of more than 2/3 of all votes issued and more than half of the votes corresponding to non-subordinated credits, excluding abstentions; or
  • There is a favourable vote of creditors whose claims represent more than half of all claims relating to the right to vote, in accordance with the provisions of the preceding paragraph and more than half of votes corresponding to non-subordinated credits, excluding abstentions.

Funding

  • No specific funding required

Involved actors

National government
Legal framework.
Other
Public prosecution. Creditors. Debtors.

Effectiveness

According to a press release from COSEC - a Portuguese credit insurer – in the first quarter of 2020, the number of applications for the Special Revitalisation Process (PER) decreased of 5%, if compared with the same period of 2019. Additionally, more than 5,100 jobs were lost and more than €87 million of suppliers' credits remained unpaid; 11,939 new companies were constituted, 25% less than in the first quarter of 2019. Micro enterprises continue to represent the majority of insolvency cases, representing 65%. This has been the trend since 2009.

Strengths

​​The company remains active, creditors have a higher credit recovery rate and the company maintains its legal and economic relationships with employees, customers and suppliers, although with some limitations. The debtor is prevented to take actions of particular significance, such as:
  • sale of the company;
  • disposal of goods necessary for the continued operation of the company, prior to its closure;
  • acquisition of real estate;
  • establish reinsurance contracts;

Weaknesses

The length of procedures  for companies and for natural persons is too extensive and far exceeds the deadlines indicated in the law.

 

Examples

Esteluz Lda Emplace - Produção Electrónica S.A Nicefood - Restauração Lda Infantário O Peixinho Azul, Unipessoal Lda Eralh - Bordados, Limitada Catatua Azul - Comércio e Indústria de Calçado S.A
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