KEY FACTS OF BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS UNDER PORTUGUESE LAW -

I. INTRODUCTION – KEY ASPECTS OF PORTUGUESE LAW - DEFINITION OF INSOLVENCY AND LEGAL FRAMEWORK -

Insolvency proceedings consist of a universal enforcement process, with the objective of satisfying creditors in the best possible way in an bankruptcy scenario, either by an insolvency plan based on the recovery of the company via the insolvency assets, or, when this is not possible, by liquidating the debtor's assets and sharing its result among the creditors.

Insolvency proceedings in Portugal are only triggered in the case of a debtor’s insolvency, which is defined, in general, as the inability of the debtor to fulfill its obligations as they fall due (cash flow criteria). Aside from this, and in the case of legal entities, the debtor is also considered to be in an insolvency situation when, according to accounting criteria, the liabilities of the debtor clearly exceed its assets (balance sheet criteria).