Best Restructuring & Insolvency Lawyers in Funchal

About Restructuring & Insolvency Law in Funchal, Portugal

Restructuring and insolvency law in Funchal, Portugal focuses on helping businesses and individuals who are facing financial distress or are unable to pay their debts. The legal framework outlines regulated procedures for restructuring assets or reorganizing a company, as well as for declaring insolvency. The goal is to protect both creditors and debtors while allowing for fair and orderly debt resolution. In Funchal, as in the rest of Portugal, these laws are designed to encourage recovery when possible and ensure equitable treatment if insolvency proceedings become necessary.

Why You May Need a Lawyer

There are many situations where legal advice or representation becomes crucial in matters related to restructuring or insolvency in Funchal:

• You or your business are facing mounting debts and are unable to meet financial commitments.
• Your company requires a structured plan to reorganize operations to avoid insolvency.
• A creditor has initiated insolvency proceedings against your assets or business.
• You want to negotiate with creditors for better repayment terms or partial debt forgiveness.
• You require guidance regarding the legal implications of bankruptcy on personal or business assets.
• You suspect that a debtor is trying to avoid paying by hiding assets or through fraudulent transfers.
• You wish to protect your rights as a creditor during someone else's insolvency process.
• You need advice on selling, restructuring, or liquidating company assets to repay creditors.

A lawyer with expertise in restructuring and insolvency can help ensure your rights are protected, guide you through the local legal process, and help you make informed decisions.

Local Laws Overview

Restructuring and insolvency in Funchal, Portugal are governed primarily by the Portuguese Insolvency and Corporate Recovery Code ("Código da Insolvência e da Recuperação de Empresas" or CIRE). Some main points to consider include:

• The law differentiates between restructuring (recovering viable but struggling businesses) and insolvency (managing the debt of those unable to meet financial obligations).
• Two main restructuring procedures exist: Special Revitalization Process (PER) for pre-insolvency cases, and Special Payment Agreement Process (PEAP) for individual debtors not operating as companies.
• Insolvency can be declared voluntarily by the debtor or involuntarily by creditors.
• When a company or individual is declared insolvent, a court-appointed administrator manages the debtor’s assets. Creditors must register their claims in the process to seek repayment.
• The court may approve a debt repayment plan, order the liquidation of assets, or, in some cases, discharge certain debts, allowing for a fresh start for individuals.
• There are strict timeframes and obligations for debtors and creditors during the process, including the submission of claims and cooperation with the insolvency administrator.
• Portuguese law includes measures to prevent fraudulent transfers and protect the interests of both creditors and honest debtors.

Local legal professionals in Funchal are familiar with these processes and can guide individuals or companies through them effectively.

Frequently Asked Questions

What is the difference between restructuring and insolvency in Portugal?

Restructuring involves reorganizing a financially troubled company to restore its viability and avoid insolvency proceedings. Insolvency is a legal status when an individual or business is unable to pay debts as they come due, often leading to court-supervised asset liquidation.

Can I try to save my business before declaring insolvency?

Yes. The law encourages debtors to seek restructuring options such as the Special Revitalization Process (PER), which allows negotiations with creditors under court supervision to reach a recovery agreement.

When must insolvency proceedings be filed?

Individuals and companies are legally obliged to file for insolvency within 30 days of acknowledging they cannot meet their obligations as they become due.

Who can start insolvency proceedings?

Both the debtor and creditors can initiate insolvency proceedings in the Funchal courts if there is evidence of insolvency.

What happens to my assets if I am declared insolvent?

Your assets become part of the insolvency estate and are managed by a court-appointed administrator, who may liquidate them to satisfy creditors.

Are all debts discharged in insolvency?

No. Certain debts, such as some tax obligations or maintenance payments, may not be discharged even after insolvency proceedings.

How are creditors notified and are they all treated equally?

Creditors are notified by the court and must submit their claims. In general, creditors are treated according to the legal ranking of their claims, not all are treated equally if some have secured interests.

Can I continue my business during insolvency proceedings?

Depending on the circumstances, some business activities may continue under the supervision of the insolvency administrator if this is deemed to maximize the value for creditors.

What is the role of the insolvency administrator?

The administrator manages the debtor’s assets, investigates financial affairs, communicates with creditors, and oversees the legal process under court supervision.

Do I need a lawyer during restructuring or insolvency?

While not always mandatory, it is highly advisable to seek legal counsel due to the complexities and serious consequences of the insolvency process, as well as the stringent requirements for restructuring plans.

Additional Resources

If you are seeking advice or assistance related to restructuring or insolvency in Funchal, the following resources may be helpful:

• Funchal District Civil Court (Tribunal Judicial da Comarca da Madeira) - handles most local insolvency filings.
• Portuguese Bar Association (Ordem dos Advogados) - offers directories of licensed lawyers specializing in insolvency law.
• CIRE (Código da Insolvência e da Recuperação de Empresas) - the primary law regulating insolvency and recovery. Copies and explanations can typically be found at legal bookstores or through government portals.
• Commercial and Industry Associations in Madeira - offer support to businesses facing financial difficulties.
• Local offices of Social Security and the Tax Authority can provide guidance on related obligations during insolvency.

Next Steps

If you are facing financial distress or believe you or your business may become insolvent, it is important to act quickly. Here are recommended next steps:

• Gather detailed information about your debts, assets, and financial obligations.
• Consult with an experienced restructuring and insolvency lawyer in Funchal to evaluate your situation and discuss options.
• If appropriate, consider starting negotiations with creditors or initiate one of the formal restructuring processes under Portuguese law.
• Be aware of relevant deadlines, especially the legal obligation to file for insolvency within 30 days if you determine you cannot meet your debts.
• Stay informed about your legal obligations to avoid accusations of fraudulent transfer or worsening your financial situation.
• Follow your lawyer's advice and comply fully with the requirements of the court and the insolvency administrator.

Obtaining qualified legal help early can make a significant difference to your case, help protect your rights, and maximize the chances of a favorable outcome.