The government wants to start the next year with a package of measures intended to curb corporate bankruptcy, reduce excessive dependence on banking and show new ways to recapitalize. The first to move, as on January 1, the system will alert the companies at risk, which will stimulate restructuring in time to avoid the negative effects that a closing of doors have on the economy, since the loss of jobs to debts they are to recover.
This system works based on the allocation of ratings , will be managed by the Portuguese Mutual Guarantee Association (SPGM), which provides financial guarantees to small and medium enterprises (SMEs) to facilitate obtaining credit . Based on indicators such as EBITDA (earnings before interest, taxes, depreciation and amortization) or the debt structure, notations will be assigned, said the PUBLIC Secretary of State for Innovation, Investment and Competitiveness.
When rating get into the danger zone, an alert is triggered for companies that will not be made public. And from that moment, the goal is that they leave voluntarily for a restructuring. Although not a mandatory nature, it is expected that companies in financial difficulties feel compelled to find a solution, since the SPGM own will to act according to the notation attribute. Furthermore, this system joins the already works at the Bank of Portugal, forcing financial institutions to take action when faced with credit risk.
According to Secretary of State Pedro Gonçalves, this measure will be the first move of a package with eleven points. A small part is already on the ground, such as reducing the threshold for the tax deductions on bank financing (provided in the IRC code) or increased tax breaks for profits reinvested in the business activity (entered in the new Investment Tax Code) . But there are other measures that are still under consultation, with the deadline to finish on Wednesday, November 12th.
The intention is that this last set of reforms “of the legislative process in this month” and it gets to the stage of enactment in early 2015. The Secretary of State believes that see the light of day “to During the first quarter “of next year. Of the 11, only one will be to implement: the creation of real estate investment companies that will allow companies to withdraw the balance charges for this component. But the government expects to enter into force in the first half.
Early Diagnosis
was also in 2012 that the Ministries of Economy, Finance and Social Security began, in conjunction with the Bank of Portugal, to draw the action plan, in line with successive warnings from troika for the extreme situation in which they found many companies and the negative effects that excessive bank debt and the inevitability of failures had on the economy. The 11 measures were closed in June after the government has submitted to the approval strategy of international creditors.
In the package of reforms for public consultation until next Wednesday is long since announced revision of two mechanisms of business restructuring in difficulties created by the current government in 2012: System Recovery for Business Via Extrajudicial (Sireve), in which the negotiation with creditors is made with mediation Iapmei, and the Special Revitalization Process (PER), which runs the courts.
Pedro Gonçalves said that the Sireve will be “an anteroom to companies in difficulties”, which will be subject to a “more thorough financial assessment to see if they are operationally viable.” The agreement of the creditors if that is the conclusion of the analysis, attempt to recover or follow the judicial process, through the PER. But, if this is not the case, “will be forwarded to insolvency,” he said.
In fact, another important change will prevent businesses that have been declared insolvent last resort to Sireve. “Not if you want to try to save zombies,” said Pedro Gonçalves, admitting that many of the companies who use these mechanisms are already in a bind.
The financial assessment, which will be able to be subcontracted to third parties is considered “vital” to ensure that companies will not be dragged into bankruptcy and determine your future, because you always have to be supplemented with a restructuring plan and a viable strategy. And every step of the approval steps to be taken will be streamlined, since the bar of required lenders today will be reduced, said the secretary of state, preferring not specify what the new limit for the quorum.
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