Restructuring and insolvency law in Angola

Both proceedings are fully governed by the Code of Civil Procedure (“CPC”).

The CPC provides for:

• Insolvency ("bankruptcy" under the Code, the term "insolvency" is only used in relation to non-traders);
• Concordata and creditors' agreement as prior restructuring mechanisms;
• Rehabilitation of the insolvent, after insolvency has been declared.

Bankruptcy may be initiated at (i) the request of the insolvent debtor; (ii) any creditor or public prosecutor within two years of the occurrence of any of the following grounds, even if the debtor has ceased trading: 

• suspension of payments by the debtor; 
• the debtor has absconded or vanished from his place of business without leaving a legal representative and/or dissipation; and 
• loss of goods or any other abusive procedure which reveals, on the part of the trader, a manifest intention to place himself in a situation where he cannot fulfil his obligations.

It can also arise from the unsuccessful use of preventive proceedings (concordata and creditors' agreement)
 

The Angolan regime defines bankruptcy as the impossibility of honouring obligations.

The inability of a trader to meet its obligations presupposes an assessment based on one of two criteria (or a combination thereof): 

1. the cash flow criterion – which occurs when the debtor becomes unable to pay his debts when they fall due, irrespective of whether the assets exceed the liabilities 
2. the balance sheet criterion – when the debtor's assets are insufficient for full performance of his obligations.

In the case of limited liability companies, bankruptcy may also be declared on the grounds of manifest insufficiency of assets to meet liabilities. 

The declaration of bankruptcy also takes place when any of the above facts mentioned in point 2 have been proven.
Regarding the insolvency of a non-trader, the debtor may be declared bankrupt when his assets are lower than his liabilities. In this regard, insolvency shall be presumed (a) when at least two uncontested executions are pending against the debtor; (b) when the debtor has been seized on the basis of a justified fear of insolvency and has not pleaded, by embargos, the sufficiency of his assets or, having alleged it, the embargos are dismissed.

As mentioned above, there are two preventive options:

Concordata is an agreement between the debtor and his creditors, whereby the debtor is obliged to pay all of the debts within a certain period of time, without jeopardising the management of the company and its assets; and

a creditors' agreement is also an agreement, but only between the creditors, reached by the majority of creditors with voting rights (representing at least 75% of the corresponding claims), which may lead to the formation of a new company in order to continue the commercial business of the bankrupt entity, provided that certain requirements are met. This new company will hold the assets of the bankrupt company and the participations of the creditors in the respective share capital will correspond, in full or in part, to the amounts of their claims.

In the absence of any means of recovery being requested and approved, by the creditors or the court, the debtor is immediately declared bankrupt.

The bankruptcy may, if there is evidence for it, be classified as casual, culpable or fraudulent.

Casual – When the bankrupt, having conducted his business with honesty and normal diligence, has been rendered incapable of fulfilling his obligations for reasons beyond his control;

Culpable – When the bankrupt has acted with obvious negligence, recklessness or prodigality, has consumed a considerable part of his assets at stake or has failed to comply with the legal provisions relating to bookkeeping and business transactions. Failure to voluntarily file for bankruptcy presupposes his guilt; or

Fraudulent – When (i) the bankrupt, knowing the impossibility of fulfilling his obligations, pays any creditors or provides them with means to obtain advantages over others; (ii) there is a description of fictitious claims or wilful omission of assets in his balance sheet, with the purpose of avoiding or delaying bankruptcy, the bankrupt has purchased goods on credit with the intention of reselling them, before payment, for a lower price than usual, if such resale has taken place; (iii) the bankrupt is suspected of simulated acts, falsely dated acts or has in any other way acted in bad faith to the detriment of the creditors.

Fraudulent bankruptcy and culpable bankruptcy are punishable by imprisonment.

There are several types of creditors. The graduation of claims is based on the following fundamental principles: 

1. First the costs of the bankruptcy proceedings are paid;
2. Then the claims of the State and local authorities; 
3. After which, the so-called preferred creditors, in respect of whom the claim enjoys security in rem, over a particular property, the value of which from the sale of that property is used for payment (if the value of the property is not sufficient to settle the entire debt, it is then paid on the terms of ordinary creditors);
4. Finally, the ordinary creditors, i.e. those who do not enjoy any security.

In the event of insolvency of a company, if there are corporate creditors and private creditors of partners with joint and unlimited liability, they are paid in preference to the latter for the proceeds of the assets of the corporate body, after the claims have been met with real collateral on those assets.

Obligation

If the debtor is unable to meet his commercial obligations before effectively terminating the payments or within ten days of such termination, he shall apply to the competent court for a declaration of bankruptcy. To this request, the debtor must attach various accounting documents. 

Consequences

If the debtor doesn’t file for bankruptcy (or insolvency, in the case of a non-trader), such behaviour has an influence on the qualification of bankruptcy/insolvency (i.e. his action may be deemed guilty or fraudulent, which are both punishable by imprisonment).

If the bankruptcy of a limited liability company is found to be faulty or fraudulent, its directors, officers or managers who prove to be responsible, as well as any accessories, will be indicted and tried for the crimes.

Directors may also respond under the general terms of the Companies Act. Under this law, managers and directors are jointly and severally liable for damages they cause to the company, for acts or omissions committed in violation of legal or contractual duties
 

The directors or managers of limited liability companies are subject to the obligations incumbent upon the individual bankrupt in the bankruptcy proceedings, and they are, furthermore, responsible for petitioning for bankruptcy, attaching for that purpose a certificate of the minutes of the meeting or general meeting at which such petition was decided.

Upon receipt of the petition for bankruptcy, the judge will appoint a bankruptcy trustee (insolvency administrator), who has the following tasks:

• Administration of the assets of the estate (assets of the company); he may perform all acts of general administration and perform all acts convenient to the conservation and enjoyment of the rights of the bankrupt, in the interest of the bankrupt and of the creditors, and avoiding, as far as possible, worsening the bankrupt’s economic situation; and 
• Selling all the assets and rights in the bankruptcy estate until the debts are fully settled.

The modality of the sale of goods is defined by the receiver (representative of the judge, who acts directly under his direction and supervision) and may take the form of a proposal in a closed letter and auction, if the sale is judicial; and sale by direct negotiation, if the sale is extrajudicial.

Notwithstanding the effects referred to above regarding limited liability companies, the decision declaring the unlimited liability company bankrupt also declares the bankruptcy of all of the shareholders of that company.

The declaration of bankruptcy has several effects in the legal sphere of the bankrupt company, specifically with regard to the shareholders: 

1. inhibition of management and disposal of their assets; 
2. ineffectiveness of legal transactions carried out after the declaration of bankruptcy, although such acts may be ratified by the bankruptcy trustee; 
3. closure of the bankrupt company's current bank accounts, immediate maturity of debts and suspension of any interest against the bankrupt estate, except if covered by a real guarantee.

No, the only alternatives to insolvency/bankruptcy are the use of preventive means. What exists is the possibility of rehabilitation of the insolvent/bankrupt when the bankruptcy has been classified as casual or when he has served or been forgiven the penalty for being guilty, or for fraudulent bankruptcy. The rehabilitation of the bankrupt can only be requested in the proceedings in which the bankruptcy is declared.

The existing regime, as mentioned above, is set out in the CPC, which provides for only two preventive means: concordata and a creditors' agreement. 

There is no available data from the Angolan courts regarding this matter.