On October 16, the Proposed Law no. 53/XIV was approved. In addition to providing for exceptional and temporary changes to the existing rules on insolvency proceedings, the Special Revitalization Proceedings (“PER”), the Special Proceedings for Payment Agreements (“PEAP”) and the Extrajudicial Company Recovery Scheme (“RERE”), this diploma creates the Extraordinary Company Enablement Procedure (“PEVE”). According to the approved Proposal, still subject to enactment by the Portuguese President, this new procedure as well as the amendments to the other listed proceedings, will enter into force on the day following its publication and, unless further extended, will remain in force until 31 December 2021.
What is and who can use the PEVE?
The PEVE is a new temporary legal procedure of extraordinary and urgent nature, aimed exclusively at companies who are demonstrably in a difficult economic situation or facing imminent or current insolvency as a result of the COVID-19 pandemic but are still susceptible of recovery. It allows these companies to enter into an extrajudicial recovery agreement with their creditors, subject to court sanctioning.
A company wishing to benefit from the PEVE must demonstrate that, on the 31st December 2019, its assets were higher than its liabilities, that it fulfils the necessary conditions for its recovery and that no PER or special payment agreement procedure is pending₁.
How is the PEVE processed?
The PEVE begins with the company’s application to court certifying that its situation has been determined by the COVID-19 pandemic and that it meets the necessary conditions for its recovery, accompanied by the recovery agreement signed by the company and its creditors (representing a certain majority) and a list of all of its creditors, signed by a certified accountant or statutory auditor.
In the case of small or micro-enterprises, recourse to the PEVE may still be possible in circumstances where, on 31 December 2019, they have no assets in excess of their liabilities, provided that none of the above-mentioned proceedings or insolvency proceedings are pending, they received rescue aid in the context of the COVID-19 pandemic which has not yet been reimbursed and are covered by a restructuring plan under the State aid rules.ClosePrint