Among its essential objectives for the relaunch of the Portuguese economy and for the creation of employment, this government’s programme aims to reduce the high level of corporate debt and the improvement of conditions for investment, namely through the elimination or mitigation of constraints that companies currently face with regards to equity financing.
These objectives are based on the assumption that business investment must take a leading role in the strong and sustained recovery of economic growth.
In compliance with one of the measures of the “Programa Capitalizar”, the Extrajudicial Regime for Business Recovery (RERE) was established, approved by Law number 8/2018, of March 2. It is an instrument through which a debtor, who is in a difficult economic situation or is facing imminent insolvency, may enter into negotiations with all or some of its creditors with a view to reaching a restructuring agreement – as a rule, confidential – for its recovery.
In addition, RERE also allows the debtor, through the celebration of a negotiation protocol, to obtain an environment conducive to negotiation with creditors.
Considering the above, the main characteristics of RERE are:
■ The content of the restructuring agreement is established freely between the parties but must include, nevertheless, measures that can clearly contribute to the recovery of the debtor;
■ The restructuring agreement only affects the credit rights of the creditors who have signed the agreement;
■ The submission of the agreement at the Commercial Registry Office determines the immediate suspension of enforcement processes that concern to the credits included in the agreement;
■ Participation in the negotiations and in the restructuring agreement is free, and the debtor may call and convene all or only some of its creditors;
■ The agreement is confidential;
■ There is the possibility of initiating a Special Process of Revitalisation (PER) with a view to the judicial approval of the restructuring agreement;
■ With the establishment of the negotiation protocol, the suppliers of some essential services, such as energy, communications and water, are prevented from interrupting supplies for a maximum period of three months;
■ There is the possibility of being accompanied by a business recovery mediator.
Thus, RERE replaces the “Sistema de Recuperação de Empresa por Via Extrajudicial” (SIREVE), revoking it, as it has been recognised that SIREVE did not meet expectations, despite having considerably different characteristics.
RERE’s main objectives are to assist companies in difficulties, by means of an early intervention in order to safeguard businesses and work placements, as well as to speed up this type of processes by removing part of them from the courts.
By Dr Eduardo Serra Jorge
|| features@algarveresident.com
Dr Eduardo Serra Jorge is founding member, senior partner and CEO of lawyers firm Eduardo Serra Jorge & Maria José Garcia – Sociedade de Advogados, R.L., created in 1987.
In his column, he addresses legal issues affecting foreign residents in Portugal.
Faro office at Gaveto das Ruas Pedro Nunes e José de Matos, 5 R/C
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