Current Context and National Trends
The year 2025 began with a significant increase in corporate insolvencies in Portugal. In March alone, 349 companies were declared insolvent, an increase of 28.8% compared to the same month the previous year. In the first quarter, there were 583 insolvencies, an increase of 21.3% compared to 2024.
This phenomenon cuts across various sectors, with a particular impact on agriculture, transportation, retail, and the hotel and restaurant industries, reflecting the vulnerability of small and medium-sized enterprises to the economic climate and inflationary pressure.
Conversely, sectors such as construction and utilities recorded slight declines.
It is also worth noting the decline in new business formations, which fell 13% in March and 3% year-to-date, reinforcing the climate of uncertainty in the Portuguese business community.
European and Global Context
The upward trend in insolvencies is not limited to Portugal. According to the Allianz Trade report, corporate insolvencies rose in four out of five European countries in 2024, with most advanced economies entering 2025 with levels higher than those seen in the pre-pandemic period.
Globally, insolvencies rose 10% in 2024, ending up 12% above the 2016–2019 average.
By 2025, insolvencies in Portugal are expected to rise moderately (+4%) and stabilize in 2026, a trend similar to that in Spain and other European markets.
Sectors such as services, textiles, and agri-food are seeing the sharpest increases in insolvencies in Europe, while construction, retail, and transportation are experiencing some declines, reflecting varying degrees of exposure to the economic climate.
Legislative Changes: The New CIRE Paradigm
The transposition of Directive (EU) 2019/1023 on preventive restructuring frameworks, debt relief, and disqualifications has brought about profound changes to the Insolvency and Corporate Restructuring Code (CIRE), promoting greater speed, transparency, and effectiveness in corporate restructuring.
The following innovations are particularly noteworthy:
a) Reduction of the Exemption Period for Remaining Liabilities
The period during which income must be surrendered to discharge remaining liabilities in insolvency proceedings involving natural persons has been reduced from five to three years, providing debtors acting in good faith with a faster second chance.
b) Strengthening the Requirements for Recovery Plans
The recovery plan—specifically under the Special Revitalization Process (PER)—now requires greater detail: identification of the affected parties, a description of the company’s financial and asset situation, restructuring measures, cash flows, impact on employment, financing needs, and a justification of the plan’s feasibility.
This transparency is intended to ensure that creditors, employees, and the court make informed decisions.
c) New Disclosure Requirements
The initial petition for insolvency must now identify companies in a parent-subsidiary relationship, group, or association, as well as other ongoing insolvency proceedings, thereby promoting transparency and preventing abuse within economic groups.
d) Role of the Insolvency Administrator
The insolvency administrator is now required to submit a plan for the liquidation of assets within ten days after the meeting to review the liquidation report, under penalty of removal from office in the event of unjustified noncompliance.
It must also submit a proposal for the ranking of recognized creditors, which may be approved by the judge in the absence of objections, thereby expediting the process.
e) Subordination of Claims by Related Parties
It is clarified that claims held by persons with a special relationship to the debtor are considered subordinated claims, thereby reinforcing fairness and equity among creditors.
Final Note
The rise in insolvencies and the decline in the number of new businesses being established in Portugal and across Europe call for increasingly swift and effective legislative and judicial responses.
Strengthening European harmonization, clarifying the role of administrators, and promoting out-of-court restructuring mechanisms are essential steps toward protecting the business community and ensuring creditor confidence.
The reform of the CIRE, driven by the European Directive, represents a decisive step toward a more modern, transparent, and efficient insolvency justice system. Strengthening preventive restructuring mechanisms, providing greater protection for debtors acting in good faith, and clarifying the roles of the various parties involved in the proceedings are essential to addressing current economic challenges and promoting the recovery of the Portuguese business sector in line with European best practices.