Opening insolvency proceedings
The opening of insolvency proceedings is the judicial step by which a company in a state of insolvency, or a creditor, asks the court to apply the procedure governed by Law No 85/2014 on insolvency prevention procedures and insolvency proceedings. Depending on the specific situation, the procedure may allow the reorganisation of the company's business and, where recovery is no longer possible, entry into bankruptcy and the liquidation of the assets, under the conditions provided for by law.
The procedure for opening insolvency proceedings involves analysing whether the legal conditions are met, drafting the initiating application, preparing the supporting documents and representation before the competent court. The step may be initiated both at the request of the debtor and at the request of the creditor, each of these procedures being subject to the conditions provided for by Law No 85/2014.
Before filing the application, the company's financial and legal situation, the existing claims and whether the conditions for opening insolvency proceedings are met are analysed. The legal strategy is established according to the procedural position of the client and the objectives pursued, in order to identify the most appropriate solution within the procedure.
Insolvency proceedings are characterised by strict procedural time limits and formalities, failure to observe which may affect the exercise of the rights of creditors and debtors. An incomplete initiating application or improperly drafted documentation may lead to the application being rejected or to the procedure being prolonged.
A properly drafted application to open insolvency proceedings, supported by an appropriate legal strategy, contributes to protecting the rights of creditors and debtors, whether the procedure seeks the reorganisation of the company's business or entry into bankruptcy where recovery is no longer possible.
Frequently asked questions
Who can request the opening of insolvency proceedings?
Insolvency proceedings may be opened both at the request of the debtor and at the request of one or more creditors, if the conditions provided for by Law No 85/2014 on insolvency prevention procedures and insolvency proceedings are met. The admissibility conditions and the documentation required differ according to the person making the request and the specific situation.
How long does it take to open insolvency proceedings?
Where all the necessary information and documents are provided, the documentation can be prepared in the shortest possible time, so that the formalities are completed without delay. The time taken to process the application depends on the time limit set by the competent court and on the particular features of the case.
When can the opening of insolvency proceedings be requested?
The opening of insolvency proceedings may be requested where the conditions provided for by Law No 85/2014 on insolvency prevention procedures and insolvency proceedings are met. Whether these conditions are met must be analysed in relation to the debtor's financial and legal situation, the value of the claims and the other requirements provided for by law.
Is it mandatory to appoint an insolvency practitioner?
Yes. In insolvency proceedings it is necessary to appoint an insolvency practitioner, as judicial administrator or, where applicable, judicial liquidator, under the conditions provided for by Law No 85/2014. An insolvency practitioner may be proposed in the application to open the proceedings, and the court will rule on the appointment under the conditions of the law. In the absence of a proposal or in the situations provided for by law, the appointment is made in accordance with the applicable procedure. Depending on the particular features of each case, advice may also be given on the choice of the insolvency practitioner.
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