Bankruptcy is governed by Law No. 05/L-083 and managed by the Commercial Court. It provides two main outcomes:
Contents
1. Reorganization
Aims to save the business. A reorganization plan is submitted (mandatory for SMEs) to restructure debts and operations. If approved by 50% of creditors, the debtor retains control while repaying debts over time.
2. Liquidation
Used when reorganization fails or isn’t feasible. An administrator is appointed to sell assets and distribute proceeds to creditors. Secured creditors have priority.
Involuntary Bankruptcy: Can be initiated by creditors if a debtor fails to pay debts overdue by 90 days amounting to at least €3,000.