Preamble

SECTION I WINDING UP AT INSTAN CE OF THE SHAREHOLDERS Article 1122 – Winding up through Court - The liquidation of assets of a society is to be done judicially if the majority of the shareholders who represent 3/4 th (three fourths) of the capital do not agree to have liquidation outside the court. However, if the memorandum of the society requires consent of all the shareholders for liquidation outside the court the same stands excluded from the above paragraph. The steps for judicial liquidation are those which are laid down below. Articles 1122-1157 – Liquidation of assets – winding up. oThis is subject matter of Companies Act. Article 1123 – Appointment of liquidators - When the liquidators are to be appointed by the judge any shareholder or creditor or the Public Ministry may apply for the same if he has sought declaration of inexistence of the society. The judge shall appoint the liquidators or liquidator and shall fix time limit for the liquidation, after hearing the shareholders, if found necessary. If he decides to hear the shareholders they shall be summoned by publication for the day fixed. § Sole Paragraph: What is provided in this article applies also to the replacement of the liquidator or liquidators. Article 1124 – Fixing time for liquidation - If the shareholders have appointed liquidators or liquidator without fixing the time to carry out the liquidation, the same period shall be fixed by the court at the instance of any shareholder or creditor, after the hearing the liquidators. § Sole Paragraph: Same procedure shall be followed when the time is required to be extended.

Article 1125 – Liquidation process - The liquidators proceed with the liquidation by selling the properties, recovering the credits and paying the debts, in accordance with clause no. 124 of article 1134 of the Commercial Code and respective Paragraphs 1 and 2.

The authorization by the society referred to in these Paragraphs is substituted by judicial

authorization. Article 1126 – Accounts of liquidators and distribution of balance - After having done total liquidation, the liquidator shall present their accounts following the article 1017. If they do not produce the accounts, any interested party may compile them to give the accounts in accordance with articles 1012 and following. Once the accounts are approved, the judgment shall be passed distributing the balance to the shareholders as per the proportion payable to each of them. Before passing the judgment, the judge may, if finds convenient, prepare accounts in form of a map, one project of partition of the balance and give notice to the shareholders to give their objections as they deemed fit. Article 1127 – Acceptance of partial liquidation - If the liquidators are of the view that the liquidation may not include all the assets, they shall present the accounts of the partial liquidation giving reasons for not proceeding with total liquidation. A meeting of all the interested parties shall be convened to find out whether the liquidation is to be accepted in the state in which it is or it is to be finalized. There being debts to be paid, meeting of the creditors shall be convened. The acceptance of partial liquidation depends upon the agreement of the majority of the members and on the capital and assent of the creditors representing 3/4 th (three fourth) part of the liabilities. The shareholders and creditors, who having been personally notified, neither remain present nor appoint representatives, are bound by the deliberations of the majority of parties present. Article 1128 – Partition in case of partial liquidation - If it is decided that the liquidation shall be finalized, the liquidators will finalize the same following article 1126. If partial liquidation is accepted, the accounts submitted by the liquidators shall be examined and

checked and if approved, the partition is to be done as agreed. In the absence of agreement, the shareholders shall deliberate on the payment of the liabilities, if there are any. After satisfying the debt or the payment being secured, any shareholder may seek licitation in the assets which have remained. Properties on which there was no bid shall be sold and lastly the partition chart will be prepared which shall be decided by the judge. The provisions of inventory shall be applicable to the licitation, sale of properties, and partition. If the accounts are not approved, whatever is provided in article 1017 shall be observed and after their approval again there shall be meeting of the shareholders and of the creditors thereafter the steps prescribed for the approval shall be followed. § Sole Paragraph: In the case of partial liquidation, the properties shall be delivered, up to the partition, to an administrator appointed by the judge, who shall have functions identical to the head of the family.

Article 1129 – Steps when total liquidation is not possible - If the liquidators are not in

position to carry out total liquidation, they shall produce the accounts and there after whatever has been provided in the preceding article as to acceptance of partial liquidation shall be followed. Article 1130 – Cases when liquidation through Court is acceptable - The steps set out in the previous articles are applicable not only for winding up of the company, but also to the cases of rescission and annulment of articles of the association and the declaration of non existence of the company. In the event there is a suit pending for the above purposes, the appointment of liquidators shall be processed by appendage to the main proceedings and fixation of the time for the liquidation. Article 1131 – Liquidation out of Court - In the case of liquidation outside the court, if it is necessary to appoint liquidators or fix the period for the same purpose, and the shareholders do not approve the accounts, if the liquidators do not complete the liquidation or at any other time the intervention of the court becomes necessary, the provisions of the previous articles shall apply, and thereafter the liquidation outside the court shall take place.

SECTION II LIQUIDATION FOR THE BENEFIT OF THE STATE Article 1132 – Summoning of unknown heirs in case of a vacant inheritance - In the case of vacant inheritance by reason of the heirs not being known, the Public Ministry contests the capacity of those who appeared or because the known heirs had made record of renunciations, after taking necessary steps to secure the preservation of the assets, the heirs shall be summoned, by way of publication, directing them to qualify themselves as heirs within the period of 20 days after end of the period of the publication. If anybody appears to qualify himself, file will be sent to the public ministry to express his views, who may within 8 days, contest the application, if there is a ground for the same. If there are different persons to qualify themselves as heirs, any other contestants may contest the application of others within 8 days subsequent to the period fixed for filing the application for qualification. To the answer given by Public Ministry or any other parties, the interested party may rejoin within 8 days. To the replication there will be triplication within equal period and thereafter steps of the ordinary proceedings or summary proceedings, shall be followed depending upon the valuation. Article 1133 – Liquidation in case of vacant inheritance - The inheritance shall be declared vacant in favour of the State if nobody appears applying for qualification or any application of those who have put appearance, has been rejected. In any of the above cases steps shall be taken for the liquidation of inheritance, by recovery the credits by selling through court the properties and after satisfying the liabilities, the balance shall be allotted to the State. § Sole Paragraph: The public funds and the immoveable assets shall be sold, when the sale proceeds of other assets is not sufficient to satisfy all the liabilities. Civil Code articles 2006 and 2008

Article 1134 – Procedure for claiming and verification of credits - The creditors shall be

notified to put up their claims within the period of 10 days from the date of personal service, if they are known, and at the end of the period of the publication, if they are uncertain.

The Public Ministry shall be afforded the examination of the file for the period of 20 days to offer its views and whatever is found necessary on the objections filed. Till the time of examination, any creditor may also claim his credits or object to the claim of others. Those claims which have not been contested are considered as approved. If there is contestation, the respective creditors who have appointed judicial attorney or chosen domicile at the seat of the court shall be notified to reply within the period of 8 days and at the end again the file will be remitted to the Public Ministry for 8 days, to raise objection to the replies as deemed fit, and up to the time of the examination any creditor claimant to give his say on the reply filed by the others. In the subsequent 20 days all the objection which may be decided on the basis of the material which is pleaded and proved shall be decided and thereafter in relation to others, the form of summary proceedings shall be followed, except where any credit is the amount exceeding to 10000$ (ten thousand escudos), it because in such case procedure of ordinary proceedings shall be followed. § 1: The debt cognizance of which is assigned to special tribunal shall be claimed by following proper remedy. § 2: No payment shall be made until the suits or claims of credits are pending. § 3: If the proceeds from the sale of the properties are not sufficient to clear all the debts or if

there are creditors with privilege or preference, the distribution shall be done either pro rata or

after marshaling the creditors. § 4: The intervention of the Public Ministry shall cease as soon as the debts are acknowledged or held tenable of the amount superior or equivalent to the proceeds of the inheritance. § 5: The provision of this article does not come in the way against the effect of any judgment secured against the inheritance of the deceased or against the guardian appointed to the same. The pending executions shall be appended to the proceedings of liquidation; and also the pending suits shall be appended in the same manner, except where the trial has started. The claims arising from preference resulting from attachment or judicial mortgage shall not be recognized. § 6: Even after end of the period of the claims to be made, any creditor who had not been personally served shall be permitted to put his claim of the credit if the liquidation proceedings are pending. If the liquidation is concluded, the creditor shall have case against the State to the extent of the amount of the balance which has been awarded to the State.

SECTION III LIQUIDATION FOR THE BENEFIT OF CREDITORS SUBSECTION I DECLARATION OF INSOLVENCY AT THE INSTANCE OF THE CREDITORS Article 1135 – Definition of state of insolvency - The businessman who is unable to pay his debts is liable to be declared as insolvent. Article 1136 – Reasons for declaring insolvency - The declaration of the insolvency shall be made in following cases:

indication who represents him in the administration of the same; 3) Dissipation and diversion of assets or any other disorderly conduct on the part of the businessman which reveals a deliberate design of putting himself of a situation of not being able to satisfy his liabilities. § 1: In limited liability companies, the insolvency may be declared on the ground that assets are not sufficient to satisfy the liabilities. § 2: The insolvency / bankruptcy shall take place also in the cases foreseen in articles 1139, 1249, sole Paragraph of 1258, Paragraph 1 of 1260, 1268 and 1284. Article 1137 – When Insolvency can be claimed for non payment of dues - If non payments take place when the businessman is doing his business, the insolvency may be applied for within 2 years from the date of non payment, irrespective of whether the opponent ceases to do his business or has expired. The insolvency may also be applied for within the same time if the non payments is towards the obligations contracted during his business has occurred within first 6 months from the time the businessman stopped his activities. § Sole Paragraph: When the insolvency is applied for on any other grounds, the limitation prescribed in this article is counted from the time the event occurred giving rise to the insolvency.

Article 1138 - Who can declare Insolvency - The court may declare insolvency:

1) On application of the businessman; 2) On the application of any creditor, either with preference or with privilege, which ever may be the nature of the credit; 3) On the application of the Public Ministry, in the case of no. 2 of article 1136; § Sole Paragraph: Following parties are not permitted to apply for the insolvency: Clause 1: The spouse of insolvent; Clause 2: His ascendants or descendents in any degree; Clause 3: His collaterals in direct line and in the first degree.

Article 1139 – Limitation for businessman to apply for declaration of insolvency - The

application by the very businessman for declaration of the insolvency is to be made within 10 days from the date of non payment, failing which he is presumed to be guilty. Article 1140 – Requisites for a businessman’s application to be declared insolvent - In order to have insolvency be declared on application of the businessman he shall make the application in writing with indication of all the particulars as to his identity, capacity of businessman with the necessary evidence along with inventory and balance sheet of active and passive, and the list of the creditors and the respective credits. Article 1141 – Creditor’s application - The creditor who desires to get declaration of insolvency shall formulate the prayer, giving the grounds of the existence of the credits, as well as of the necessity, if really exists, to make such declaration, without hearing the opposite side, and immediately listing the evidence he proposes to adduce. Article 1142 – Hearing of respondent - The court may grant the declaration of the insolvency either without hearing the opposite side or after issuing the summons to the opposite side to give the reply within 48 hours. In the later case the debtor may along with his reply produce the documents and witnesses, provided that he undertakes to produce them without service of notice, at the time of the hearing. The debtor may produce at that time also his own books of account.

If the debtor does not reply, the court shall decide the matter ex-parte. § Sole Paragraph: The service of summons shall be made in the main establishment even though he is not found at the same place. See also Article 82 of this Code. Article 1143 – Time for Inquiry - The inquiry shall be held within the 8 days next to the receipt of the petition or time limit given to the adversary, in the case notice is issued to the adversary. § Sole Paragraph: For the purposes of these articles, the application for declaration of insolvency shall always be considered of urgent nature and shall have preference over any other work. Article 1144 – Hearing of arguments and Judgment - At the hearing, which shall take place even in the case of article 1140 after evidence is led, shall hear the appointed attorneys may formulate also questionnaire on the facts and give answer to all the points of questionnaire. In the event it is not possible to pronounce immediately the judgment it shall be done within 5 days and service of the notice to the applicants and adversary within 48 hours. If the court declares the insolvency in final judgment shall fix time limit between 30 to 90 days, to the creditors to present their claims. Such final judgment shall be immediately enforced and notified to the Public Ministry and registered in the land registration office at the instance of the later and published by extract in the official gazette and in one of the newspapers of the locality, if there is, and by notices fixed at the door of the domicile of the adversary at the seat of the establishment or branch of the insolvent and at the door of the court and all the steps shall be complied within 3 days and information sent to the criminal register, as soon as administrator of the insolvency furnishes necessary particulars. Article 1145 – Withdrawal of application - Before delivering the judgment, the applicant may withdraw the prayer except where facts have been pleaded which disclose existence of guilt or fraud. See also Article 298 of this Code. Article 1146 – Who can appeal - From the judgment, appeal may be filed by the businessman declared as a insolvent, or the applicant, or any creditor who has locus standi for the purpose and

it is for the judge to decide summarily the question of locus standi, without prejudice the subsequent steps for verification of the liabilities; and if it is found that the insolvency was declared on account escape or absence of the businessman, appeal may be filed also by any of the parties mentioned in sole Paragraphs of article 1138. § Sole Paragraph: The final judgment which refuses to declare insolvency shall be forwarded in the same file, without keeping on record any certified copy. Article 1147 – Who can file objections to the declaration - Once the judgment of declaration of insolvency is delivered, the insolvent who has not expressly acknowledged such existence or who has not claimed to exist the case for the same to the court may, within 8 days immediately next to the publication of the final judgment in the official gazette, may file objection. The same remedy is available to the spouse, ascendant and descendent in case the insolvency is declared on account of escape or absence from the establishment, to the spouse, heir, legate or representative of the businessman declared to be in insolvent after the death, or who has expired before the time limit indicated in the first part of these articles. In such cases the limitation to file the objection is of 30 days, from the time of publication of the final judgment.

Article 1148 – Grounds for objections - The objections may be filed only on the grounds

mentioned below: 1. Where the person declared as insolvent is not a businessman; 2. The applicant has no locus standi; 3. The right to apply for insolvency is already lost on account of prescription;

4. The name of the person declared insolvent is found in the agreement between the creditors

duly homologated by the court; 5. The payment has not been stopped or may not be treated as such; 6. There was valid ground for not making payment in respect of the claim on account of which insolvency is sought; 7. The absence from establishment is duly justified; 8. The facts alleged as ground for declaration of insolvency are not true or are justified so as to indicate the purpose of the businessman to be placed in the situation or in the inability of satisfying the agreements; 9. The value of the assets is exceeds the liabilities.

§ 1: The grounds mentioned in clauses no. 1, 2, 3, and 4 may be pleaded, which ever may be ground for declarations of insolvency; however, the grounds shall not be entertained if it is found that the person declare as insolvent is registered as businessman. § 2: The ground mentioned in clause no. 9 may be invoked only in respect of limited liability companies and when insolvency was declared on grounds of insufficiency of the assets for the satisfaction of the liabilities. § 3: Other grounds may be urged only when they have direct relation with the fact on the basis of which declaration of insolvency is sought. Article 1149 – Raising, admission and opposition to objections - The objections are to be filed by way of pleadings and paragraph wise and thereafter the office is to present it to the judge to pass the order either accepting or rejecting the objections. In the event the objections are admitted, within 48 hours, notice shall be issued to the administrator and applicants of proceedings for insolvency to contest them, if so desire, within period of 5 days. § 1: From the order which admits the objections appeal from order lies and against the order which reject the objections appeal from final judgment lies. § 2: With the objections and corresponding written statements, opposing them, evidence shall be listed and which the parties propose to avail. Article 1150 – Hearing and judgment - Subsequent to the written statement and production of the evidence which the party wants to avail before the trial, and trial will start and the provisions of article 1144 shall be observed to the extent applicable.

Article 1151 – Steps in proceeding stayed by objections - The objections suspend only the

steps subsequent to the passing of final judgment namely the verification of the claims of the creditors, however in the case of urgency even sale of the assets may take place. Article 1152 – Mandatory finding on bad faith of applicant - In case the claim of declaration of insolvency is declined or the final judgment which has declared it has been revoked, it will always be examined whether the applicant has acted in bad faith to secure the order and in the

affirmative the applicant will be directed to pay the fine and compensation for damages in accordance with articles 465 onwards, without prejudice to criminal proceedings which may take place. SUB SECTION II CONSERVATORY MEASURES Article 1153 – Seizure of assets - After the insolvency is declared, steps shall be taken immediately to seize all the assets of the insolvent, even though the assets have been seized or attached or by any manner detained, without prejudice to the right of the creditors for the legitimate withholding. § 1: The court of the insolvency may solicit to the court or competent authority the remission of the proceedings where seizure attachment, apprehension or detention has been made and directing handing over of the respective assets to the administrator, except were the assets have been attached in the fiscal execution or the Government lending agency.. § 2: The assets which are exempted from the attachment as per articles 822 onwards, shall not be seized except where they have been voluntarily delivered by the insolvent.

Article 1154 – Seizure of amount paid - The amounts paid by the insolvent whenever the

inefficacy of such payment has been declared by the final judgment, shall be seized in the hands of those who have received them, on the condition that the same person shall deliver the assets to the estate, failing which penalty will be imposed on a receiver in default. Article 1155 – Who attends the seizure - The act seizure shall be presided over by the judge and in the presence of Public Ministry and of insolvency trustee who may preside under authority delegated by the former. Article 1156 – Delivery of assets to administrator or Receiver - Whenever the seizure has been made the assets seized shall be delivered to the administrator, who, on his own responsibility, may entrust the custody to the any other person of his choice and take steps which he deems fit. The administrator may also be authorized by the insolvency trustee to receive the assets under a list prepared which shall be filed in the court.

§ Sole Paragraph: The assets seized in a judicial division different from that of the insolvency shall be handed over to the custody of receiver appointed by court to which rogatory letters was addressed. Article 1157 – Advance sale of assets - The provisions of article 851 and its paragraph shall be applicable to the administrator to the extent they deal with the receiver and the hearing of the parties shall be substituted by hearing of the insolvency trustee. SUB-SECTION III EFFECT OF INSOLVENCY DIVISION I EFFECTS OF INSOLVENCY IN RELATION TO THE INSOLVENT AND TO HIS CREDITORS

Article 1158 – Interdiction of Insolvent - The declaration of the Insolvent has the effect of

disabling the debtor from administering and disposing of his assets which he owns or which he may acquire in the future, until the vacating of the interdiction, as foreseen in article 1317, and results in suspending, in relation to his assets, the further prosecution of the inventory on his death. § l: The interdiction of the debtor includes the carrying out the business, and holding the positions of manager, director or administrator of any commercial or civil society. § 2: The liquidator shall be representing the debtor, for all purposes, except in relation to his exclusive personal life or alien to the insolvency. Articles 1158-1368 (210 Articles) - Insolvency is a large portion of the code broadly corresponding to the Insolvency and Bankruptcy Code 2016. Article 1159 – Ineffectiveness of the acts and contracts by the Insolvent after the declaration – The acts and contracts done by the debtor, subsequent to the declaration of Insolvency by judgment shall be of no effect in relation to the assets of the debtor, independent of any declaration by the court. § 1: However, the contracts of rendering service, Will, acceptance of inheritance for the benefit of

the inventory and any other acts relating to public functions or alien to the Insolvency. § 2: It is lawful to the debtor, in any case, to acquire by his work the means of subsistence. Article 1160 – Fixation of maintenance for the Insolvent - In the event the debtor requires badly the means of subsistence, the judge may, after hearing the liquidator, award him temporarily reasonable subsidy as maintenance. § Sole Paragraph: There being a reasonable ground, even the maintenance may be stopped at any stage of the proceedings, by decision taken either ex-officio or on the application of the liquidator or of any creditor. Article 1161 – Fixation of residence of Insolvent - After the judgment declaring the Insolvent is pronounced, the debtor shall sign a declaration fixing his residence, and is not permitted, during the pendency of the proceedings, to absent himself from his domicile without express permission from the court or the trustee to whom he shall inform where is he going and period of his absence. § 1: All the services of the notice to the debtor, when he has not appointed attorney with domicile in the Judicial division shall be made at the residence indicated in the undertaking. § 2. What is provided in this article is not applicable to the administrators, managers, directors of the society with limited liability, who shall be notified within the jurisdiction of respective court. Article 1162 – Duty of Insolvent to appear in person - The debtor is bound to appear personally in the court whenever so ordered by the judge or by the liquidator, except where there is legitimate impediment permitted by the court by express order to that effect for representation through his attorney. Article 1163 – Penal sanctions – On breach of the preceding two articles the debtor shall incur criminal liability for disobedience. Article 1164 – Effect of Insolvency on Creditors - The declaration of the Insolvency has the effect of closing the current accounts of the debtor, and immediate maturing of all his debts and suspension of accrual of any interest against the estate of a debtor, except those arising from mortgage which are guaranteed by mortgage in accordance with the civil law.

§ 1: However, the accrual of the interest even in the respect of debts guaranteed by mortgage and duly executed and registered at the time when the debtor was not a businessman stand suspended, if the respective creditors, having not participated in the Insolvency proceedings, have not initiated, within the period fixed, the claims, the competent suits, or executions, or not prosecuted further the normal course of the proceedings. § 2: To the debts which are not matured, which only on account of the Insolvency become recoverable, the interest which is accumulated or capitalized, in respect of the period which falls short of the time for normal accrual of the debts shall be deducted. § 3: Penalties imposed on account of delay in the payment or forcible recovery and specially the increase of rate of interest and fees of the judicial attorney are not to be enforced against the debtor. Article 1165 – Effect of Insolvency on proceedings to which the Insolvent is a party - Once the Insolvency is declared, all the matters in which questions relating to estate of the debtor is in issue shall be appended to the Insolvency proceedings, except where there is any appeal pending from the final judgment, because in such cases the appendage shall be done only after the judgment becomes res judicata. § 1: From the cases mentioned in the body of the article stand excluded the matters in which the debtor is the plaintiff, the suits relating to property, the suit relating to the status of the persons and those in which there are other defendants besides the debtor. § 2: The declaration of the Insolvency prevents institution of any execution against a debtor; however, if there are other execution opponents the case shall proceed against them. Article 1166 – Subsistence of bilateral contract by the Insolvent - The Insolvency declaration does not cause the rescission of bilateral contracts in which the debtor is a party, which may or may not be given effect, depending upon the view of the syndic and decision given by the judge which is found convenient to the estate of the bankrupt debtor. In the second case, the administrator shall notify the other contracting party to whom right is safeguarded to demand from the estate the appropriate damages for losses in the proceeding for verification of the credits.

§ 1: If the tenancy contract of the house, establishment and godown of the debtor is continued, then rent shall be paid fully by the liquidator of the Insolvency. § 2: However, what is provided in this article shall not apply in the event there is express provision of law declaring that with institution of the Insolvency proceedings the contracts stand rescinded.

Article 1167 – Set off of Credits - If there is, before the declaration of the Insolvency, off-

setting, provided in articles 765 and following of the Civil Code, the same shall be taken into consideration in the verification of the credits. § 1: When there are reciprocal credits which cannot be off-set as per the body of this article, the debtor shall pay to the estate fully his debt, and if there is no preferred credit or preference, he shall receive payment of his credit only proportionate to what he is to receive. § 2 : The debtor of the estate who off-sets shall prove that he was entitled to those credits on the date of declaration of the winding up. DIVISION II EFFECTS OF INSOLVENCY IN RELATION TO THE ACTS WHICH ARE PREJUDICIAL TO THE ESTATE Article 1168 – Acts which may be annulled to the benefit of the estate - The following acts shall be annulled to the benefit of the bankrupt estate:- 1) The acts which involve decrease of the value of the estate of the debtor, executed by way of gratuitous title, within 2 years prior to the judgment declaring the Insolvency, including the renunciation of the estate, legacy or usufruct; 2) The guarantees for the debts; 3) Amicable partitions in which the debtor has received only amounts which may be easily concealed and to the other interested parties all the immovable property are allotted or nominal values, when executed one year prior to the declaration of the winding up. § Sole Paragraph: What is provided in clause no. 1 does not cover the gifts by usage and custom, nor those which arise from fulfillment of moral or legal duties.

Article 1169 – Rescission of fraudulent act and those to the detriment of creditors - The acts done by the bankrupt debtor before the lifting of the interdiction are liable to be rescinded before the vacating of the interdiction, in the case of articles 1030 and following of the Civil Code. Article 1170 – Acts presumed to be in bad faith - Following acts are presumed to be executed with bad faith by the interested parties who intervene therein; 1) The acts done with consideration executed within 2 years prior to the date of declaration of the Insolvency in favour of the spouse, of the relation up to sixth degree, of the concubine, of the servants or subordinates by any legal relation; 2) The payments or compensations agreed upon for the debts not matured or for the debts matured during one year prior to the date of the judgment of the Insolvency, with the payments usually made with the money not meant for the same; 3) The guarantees created on the properties by documents subsequent to the obligations one year prior to the judgment of declaration of the Insolvency and those constituted simultaneously with the respective obligations within 90 days prior to the same judgment; 4) The alienations with consideration, in favour of any persons who are not mentioned in clause no. 1, when: executed within 90 days prior to the date of the judgment declaring the Insolvency. Article 1171 – Effect of rescission or annulment - Once an act is rescinded or annulled, all the respective values revert back to the estate of the debtor. In the cases where other contracting party has right to restitution, the same shall be considered an unsecured credit. Article 1172 – Appending of suits for annulment or rescission - The suit for annulment or rescission shall be dependent on the Insolvency proceedings and may be filed by the administrator authorized by the syndic, or by any other creditor. § Sole Paragraph: In the same proceeding it is lawful to seek annulment or rescission of different acts, even though the ingredients prescribed by articles 29 and 30 are not satisfied. SUB SECTION IV ADMINISTRATION OF THE BANKRUPTCY ESTATE

Article 1173 – To whom does the administration of the bankruptcy estate befall - The

administration of the properties of the debtor falls on the administrator under the supervision of the syndic in accordance with following provisions. Article 1174 – Powers of administrator – Personal character of the post - The administrator may do all the acts of general administration, and any special powers may be exercised with the express permission of the syndic and to that the provision of the agency would apply, which are not inconsistent with the provision of this sub-section, and besides in respect of assets of the estate subject to penalties of infidelity of the depository. § Sole Paragraph: The exercise of the role of administrator is strictly personal, except in cases where there may be necessity of judicial attorney.

Article 1175 – Duties of administrator - The administrator shall immediately assume the

charge, doing whatever necessary for the preservation of the assets and rights of the debtor, in his interest and of his legal creditors and inquiring in detail the status of the estate of the debtor, and condition in which the business was done and the causes which have given rise to the insolvency. Article 1176 – Opening of correspondence addressed to the Insolvent - All the correspondence addressed to the debtor till the date of the pro rata apportionment to the creditors shall be delivered to the administrator, in order to be opened in the presence of the debtor; or; he being an absentee, in the person chosen by him for such purpose, and, in his absence, in the presence of the judge and handing over to the same Insolvent or representative the papers not concerning the administration of the estate and keeping entirely confidential the private matters contained in the correspondence.

Article 1177 – Permission of the Insolvent to do certain act - The administrator upon the

proposal of the manager may permit the debtor to help the administration and to do specific acts of the business, and fixing for the purpose period and remuneration. § Sole Paragraph: The syndic may, at any time, revoke such permission. Article 1178 – Balance sheet of the exercise of administration - In first three days of each month the manager shall submit to the administrator, one balance sheet of the exercise of the administration of the previous month, in which specific mention shall be made of all the amounts received and spent during that period.

Article 1179 – Questioning of the administrator - The suspicion may be raised against administrators in the same manner as against the head of the office of the court. § Sole Paragraph: The suspicion having been raised, the administrator shall continue to hold the office until the same issue of suspicion is decided. See also Article 134 of this Code. SUB SECTION V VERIFICATION OF DEBTS

Article 1180 – Claiming of credits - Within the time fixed in the judgment declaring the

Insolvency, the creditors of the debtor may by way of application claim their credit either common or preferential, indicating their nature, amount and the origin. They may also express their view on the aspect of insolvency. § Sole Paragraph: The credits of the claimants of the insolvency shall be judged and marshalled independent of specific application. Article 1181 – Filing and attaching claims - The verification of the debts shall be made on the basis of objection made and, duly processed and to which subsequent objections and respective documents shall be taken on record. Article 1182 – Certificate of encumbrance and notice to creditors - Before crossing half of the period fixed for the objections the administration shall produce on record certified copy of all the encumbrances on the assets of the estate and stating the expiry of the period by way of the registered letter addressed to the all the creditors already registered and besides those who are found from the books and documents of the debtor even though they have not put their claims of their credits. § 1: The administrator shall prepare a list from where names of all the creditors are found in accordance with these articles, their addresses and number of registrations of the post of each of them, which shall be annexed to the file along with the opinion to which reference has been made in the article 1185. § 2: The lack of notice, in accordance with these articles, to the creditors not listed is not a ground to put up the claim beyond the limitation period. The lack of such notice to the creditors who

have been listed is applicable what is provided in sole Paragraph of article 864. Article 1183 – List of unclaimed credits - After the time for raising the objections is over, the administrator shall within 3 days, produce in the office, as appendage to the file, the indication of any credits which have not been claimed and which are found from the record and may appear to be genuine and true. Article 1184 – Disputing of credits - Within next 5 days after the time limit fixed the creditors or the debtor may contest by way of application, the existence or nature of any credit claimed or indicated by the administrator. § Sole Paragraph: The answers shall be annexed to the proceedings as per the order of their production and during the time fixed for the presentation they will be open for inspection in the office of the court with the documents and books of the debtor in order to be examined by any interested party. Article 1185 - Say of the administrator on credit claimed - Within the period of 5 days after the time limit fixed in the preceding article the administrator shall give, on the penalty of the suspension, short opinion but, with all the particulars in respect of each of the credits claimed or indicated by him, declaring specifically from the record what particulars are found and with supporting documents, indicating since when the default causing winding up was started and furnishing any other particulars which he finds fit. In the same opinion the administrator may object, in totality or in part, the existence and nature of any credit supporting his grounds for objections. Article 1186 – Grounds for contesting - The answers of the creditors and of the debtor, as well as of the administrator, may be on the point of nullity, prescription, sham transaction and forgery or any other ground which may extinguish the obligations and contracts executed by the debtor or invalidity, postponement or suspension. In such case the grounds shall be Paragraph wise and the written statement filing the opposition and drawing the conclusions.

Article 1187 – Rejoinder by creditor - The creditor whose credit has been opposed in the

manner indicated in the previous article may rejoin within 5 days next to the period indicated in

article 1184. Article 1188 - Evidence - With the applications, answers and rejoinders all the documents shall be produced and the list of witnesses and it may be applied to have any other step in support of the proof. § Sole Paragraph: If the party is not in position to produce any document, the judge shall grant him reasonable time for the production without prejudice to the course of the proceedings.

Article 1189 – Chart of the objections - Upon the receipt of the opinion expressed by the

administrator, the office shall prepare and produce in the main suit, within 48 hours, one chart of all the objections containing the particulars as to the name of the objector, date of the objection, folio of the appending proceedings where it is found, the quantum of the credits, their source, if they were objected and in the affirmative by whom, folio were the objection is found and, beside this, open place to be filled at the proper time with the indication of the decision, if appealed from or not, and result of the same. Article 1190 – Curative order and questionnaire - Thereafter, the proceedings shall be presented before the court in order that, within eight days, all the preliminary or prejudicial questions are decided and questionnaire is prepared, in accordance with articles 514 and 515. Article 1191 – Production of evidence - If there is evidence to be led before the trial, the judge shall take steps to see that they are carried out and which should be concluded within 60 days, from the day of the order directing to carry the same and such evidence led by any party may be relied upon by all the parties.

Article 1192 – Say of Public Ministry and date for arguments and judgment - After the

evidence is led to which reference is made in the preceding article or after the time fixed for letter of request is over, the proceeding shall be put before the Public Ministry, for a period of 5 days to express his opinion in general interest of all the creditors and particularly to secure that rights of the Government are safe guarded and thereafter alter subsequent 15 days date for the trial shall be fixed. § Sole Paragraph: The creditors whose credits have not been objected shall not be notified for the

trial. Article 1193 – Arguments and judgments - At the trial the evidence shall be read as per the order of the presentation of the objection. For the hearing of the arguments the advocate for the objectors shall be heard first and thereafter those who have offered the contestation, to the administrator of the estate if anybody has been appointed, and lastly, to the Public Ministry, without any replication. The hearing shall be continued in subsequent days, if it is not possible to conclude it on the first day. Article 1194 - Judgment - The judgment shall be delivered within 10 days, in which the judge shall fix date of bankruptcy, and thereafter either restitution or separation of the properties or rights claimed, to verify and rank the credits in accordance with law and decide the question referred to in article 1186. § 1: The ranking shall be general to the assets of the estate of the bankrupt and particular for the properties of preferred credits or preferences. § 2: In the ranking of credits the preference arising from hypothecation referred by article 676 shall not be considered, not even that arising from the attachment, but the cost paid by the plaintiff or creditor applicant shall be equated to the proceedings of winding up in order that getting the privilege of exclusion. § 3: The fixation of the date of bankruptcy establishes legal presumption of insolvency against third parties strangers to the proceedings and constitutes full proof of this fact against the creditor who has taken part. Article 1195 – Who can appeal - From the judgment of verification and ranking appeal may be file by the claimants, contestants, bankrupt and administrator of the estate and the Public Ministry. Article 1196 – Suit for verification of credit or right to restitution and separation of assets - After the period for objections is over, it is permissible to verify fresh credits and the right of the restitution or separation of the assets by way of suit instituted against the administrator and creditors, and for that purpose service of summons be effected against them by publication for the

period of 10 days. § Sole Paragraph: If any suit is filed, the plaintiff shall make a protest in the main proceedings for insolvency. The effects of the protest, mentioned herein after shall lapse if the plaintiff fails to take the necessary steps for a period of 30 days.

Article 1197 – Position of Creditor and Interested Party who files the suit but does not

observe the provisions of the preceding article - If the suit for verification of the credits has not been filed and has not followed the steps prescribed in the preceding articles and its paragraph, the creditor shall have a right to participate only with reference to his credit duly verified, in the apportionments subsequent to the respective judgment becoming res-judicata, even if the credit may be with a privilege. If the suit instituted and followed beyond the time prescribed in the previous article and has purpose of verification of right of restitution or separation of the assets, the plaintiff shall have a right to make them effective only if such rights have been recognized in the respective judgment, becoming res-judicata, in relation to the assets which by this time have not been liquidated; if they have been liquidated fully or in part, up to the quantum of the proceeds of the sale, when the same may be quantified, and when it cannot be, up to the quantum of the value which was attributed to them in the valuation. The plaintiff shall be paid with preference in relation to any creditors, but only by the value which have not been given or has been lifted with priority from the estate which have not been taken into consideration in the previous lifting or previous distribution either conditionally or finally, not even have been safeguarded in relation to the third party in view of appeal or protest in accordance with sole Paragraph of previous articles and which account of this are found free from the estate of the bankrupt. Article 1198 – Appending of actions and applicable procedure - The suits referred to in the preceding articles shall be appendage to the proceedings of insolvency and shall follow whichever may be value of the suit, the steps of summary proceedings, and costs shall be on the plaintiff, unless there is written statement filed. Article 1199 – Application for provisional delivery of mobiliary assets - The claimant of the specific movables shall apply for provisional delivery and the same shall be granted, upon the

claimant filing a bond and furnishes a guarantee, if it is found necessary. In respect of such prayer and on the value of the objects claimed, necessity of furnishing guarantee, fixation of the value of the same, or suitability of the surety, the administrator shall be heard. If the objection is finally rejected, the assets shall be returned to the estate of the debtor along with the objects provisionally delivered or the amount of the security.

verification of the credits shall be also applicable: 1) To the objections and verifications of the right of the restitution, to their legitimate owners of agricultural properties and other assets which exists within the estate of the debtor and of which the bankrupt was depository commission agent, creditor of the pledge, depository or by any other title, a mere holder of the properties; 2) To the objections and verifications of right which the spouse may have to separate from the estates of the exclusive assets or dotal properties or the moiety in the common assets; 3) To the persons who propose to separate from the estate of the debtor the assets of third parties which have been unduly seized and as well as others, to which the bankrupt had no right, or has no exclusive right, but enjoyed jointly, or as usufructuary, fideicomissary, or under any other title which does not convey full and exclusive ownership, or which are strangers to the insolvency proceedings or cannot be lawfully seized to the benefit of the estate of the debtor; 4) To the case foreseen in article 468 of the Commercial Code in accordance with the same, by chance there has been unauthorized seizure of the thing sold; § 1: The separation of the assets mentioned in this article may be ordered by the judge, upon the application of the administrator of the insolvency, duly justified. § 2: When the objection is over merchandise or other mobiliary assets, the objector should prove his ownership over the same, except where there are perishable, but the amounts of money may be demanded if they are attached to the promissory notes or in any other manner detached from the patrimony of the debtor. § 3: If the merchandise sent to the debtor as depository or by way of commission and sold on credits, the commission agent may demand the price payable to the purchaser, so that he may collect it from the purchaser.

§ 4: If the merchandise sent to the bankrupt in connection with sale on credits, the same may be demanded until they are on transit or even when they are found in the godown of the bankrupt if they can be identified and separated from the properties belonging to the estate of the debtor.

Article 1201 – Claim by the insolvent or his wife for their exclusive rights alien to the

insolvency - The bankrupt or his wife without permission of the husband, may enforce her own exclusive rights, alien to the insolvency. - Article 1202 – Application for restitution or separation of assets seized late - In case there is seizure of assets in favour of the estate of the debtor after the period fixed for objections is over, it is permissible to pray for satisfaction of the right of the restitution or separation of any such assets within the period of 5 days subsequent to seizure, by way of application, which shall be appendage to the main proceedings, and the creditors shall be summoned by way of publication for 10 days to contest within the same time thereafter the administrator may contest or give his opinion within 3 days. § Sole Paragraph: After the limitation periods prescribed in the body of the article are over, file shall be presented to the Public Ministry, for 48 hours and thereafter other formalities of the verifications shall take place.

Article 1203 – Right of creditors in case of insolvency of debtors for joint liabilities –

Whenever, there are insolvents with joint liability, the creditors shall have claim in the bankruptcy estate, but not exceeding their share in the credits. § Sole Paragraph: The creditors who exercise such right shall not demand payment of any sum due to them without production of their titles deed, or certified copies thereof, if they are produced in some proceedings and in them the payment received shall be noted; and necessary communication shall be sent in all proceedings wherever there claim has been put, failing which they shall be liable to pay double of amount received by them without right, being liable in all the cases for payment of damages. Article 1204 – Preference to costs and other amounts - The judicial costs, the expenses of the

administration approved by the court, the remuneration to the administrator and the percentage payable to the States are alien to the verification of the passive debt and shall be paid in preference over all the assets of the estate and in due proportion of the produce of each type of assets, mobiliary or immobile, even though they might have been subject of pledge or mortgage. SUB SECTION VI APPRECIATION AND LIQUIDATION OF THE ASSETS DIVISION I APPRECIATION OF THE ASSETS

Article 1205 – Preparation of balance sheet - The balance sheet of the insolvent, either

presented by him, or by the administrator, shall be accompanied by minute description of different items of the assets. Article 1206 – Valuation of assets in case of disagreement by administrator - When handing over of the assets has been done privately to the administrator and if he disagrees with the valuation done by the debtor to any item of the assets, he shall report the matter to the judge, who may direct judicial valuation, if found necessary; valuation may also be done on the application of any creditor.

Article 1207 – Recovery of credits - The credits of the debtor shall be recovered by the

administrator diligently, privately or through court, depending upon the circumstances, starting from date of the maturity till the verification of the credits, and thereafter the judge, after hearing the administrator, shall decide what is found fit and secure and convenient liquidation of what remains, and he may also grant moratorium for the payment, direct the auction of debts or declare the debt non recoverable and cancel the entries in the revenue office about the record of the debts. § Sole Paragraph: The administrator shall produce in the main file of insolvency a list of the credits receivable by the debtor, with the specification each of them, and of the result of the steps taken to recover the same in the suit which are pending for that purpose, and give his view over the convenience of instituting fresh suits or not.

Article 1208 – Recovery of sale of assets given on pledge or subject to lawful retention - The

assets of the debtor given in pledge, legally created, or subject to lawful retention may, upon the application of the administrator and after hearing the administrator and the debtor may, at any time be discharged or sold, and in such case the credits with pledge shall be notified to be produced at the time of auction, failing which there will be seizure and loss of privilege, in addition to criminal liabilities incurred by them. DIVISION II LIQUIDATIONS OF THE ASSETS Article 1209 – Sale of assets and rights - After the verification of the liabilities, sale of all the assets and rights of the estate may take place until complete liquidation. § 1: Once the right of restitution or separation of assets under indivision or others over which the debtor had right or any other right undefined, only the right which the debtor had over the assets shall be taken for the purpose of the liquidation. § 2: If there is appeal pending from the judgment directing restitution or separation of the assets or protest by way of suit pending about the restitution or separation, no liquidation shall take place of those assets until there is a decision passed which has become res judicata, save when there is no decision which has become res judicata, except the cases of the consent of the appellant or protester and anticipated sale in accordance with article 1151. Article 1210 – Who effects the liquidation - The liquidation of the assets shall be done by the administrator under supervision of syndic, in accordance with articles mentioned herein under and within the time fixed by the judge, and which may be extended once for not more than half of the time originally fixed. Article 1211 – Sale by auction - The liquidation of the assets of the estate shall be done by way of auction, either in total, or lots or parcels, which ever may be more advantages, and the sale should be done in auction, announcing with due anticipation laid for judicial auctions and notice of which shall be given to the public by way of publication and by notices published in the local

press.

Article 1212 – Sale by proposals in sealed covers - When it is found more convenient, the

liquidation of all or part of the assets may be done by sealed tenders, and in such case notice shall be published in two successive issues of the newspapers of the locality, inviting competitors and fixing the period within which sealed proposals shall be received. The notices published shall specify which assets are to be liquidated and as well as the address of the person to whom the proposals are to be submitted, and the day, hour and local in which the opening will take place. § 1: The proposals shall be opened by the trustee in the presence of competitors and creditors who are present and record shall be prepared of all the happenings. § 2: The trustee, assisted of administrator, shall appreciate advantages or disadvantages of the proposals and he may resolve the acceptance in the very act of the auction or shall fix the time, never exceeding 8 days, for the purpose of appreciation, but in such case day, time and place for acceptance or rejection may be made public, § 3: After the acceptance of any proposal, the proposer, if he is present, shall effect the deposit referred to in the subsequent articles and if he has not appeared, he shall be served notice to effect the payment within 3 days, failing which, he shall be liable or compensation for losses and damages. Article 1213 – Deposit of part of price - No award shall be made without the auctioneer or proposer depositing at least 10% of the price. Article 1214 – Private Sale - In case of manifest benefit to the estate, the sale of any assets may be effected privately, but in such case with prior necessary permission, duly supported, of the trustee shall be necessary, preceded by hearing of the debtor, if available in the Judicial division. § Sole Paragraph: If it is a case of immovables, the permission will be always special and individual, except where several immovable assets were attached to operate one and the same industry. Article 1215 – External formalities of extra judicial sales - In the extra judicial sales of assets of the estate, in respect of documentation, the formalities provided in the law for alienation amongst the private persons, shall be observed and the manager shall intervene as representative of the estate.

Article 1216 – Exemption of deposit to creditors and guarantors of light of preference - To the creditors who acquire the assets of the estate and to the persons who have right of preference, the provision of articles 906 and 892, respectively, shall be applicable. Article 1217 – Complaints against irregularities in liquidation - Against irregular or prejudicial acts done in the course of liquidation, the creditors may address in writing complaints or objections to the judge of bankruptcy who after hearing the trustee shall decide. Article 1218 – Deposit of the proceeds of liquidation - When the process of liquidation is in progress, its proceeds shall be deposited in the judicial Treasury in a special account payable at the order of the manager, who may withdraw the amounts indispensible to carry out expenditure of the liquidation and administration, and the respective cheques shall be counter signed by the administrator. § Sole Paragraph: From the deposits referred to in this articles no percentage is to be drawn in favour of the treasurer, as the same shall be determined in the final account but only in relation to costs and stamps which have been calculated. Article 1219 – Transfer of balance and convening meeting of creditors - After the liquidation is over, the manager shall transfer immediately to the account of the court and at the order of the judge the balance existing in the special account preferred to in the preceding articles and shall give the accounts of all the acts to the assembly of the creditors. § Sole Paragraph: The assembly shall be convened by the manager by way of registered letters and notices published in one of the newspapers of the locality with minimum anticipation of 8 days designating therein the time, hour, place fixed by the administrator for the appearance of the creditors and also the place where the accounts have been kept for perusal with books and other papers to be examined by any interested party within the period of not less than 10 days. Article 1220 – Approval of debts by creditors’ meeting - The assembly shall be presided over by the syndic and in that the creditors shall deliberate, by majority of votes, about the approval of accounts and over the remuneration to be paid to the manager, which shall not exceed 5% of the amount recovered. To each lot of 1000 escudos shall correspond one vote. The creditors for lesser

amount may join together and appoint one representative provided that total amount be equal or superior to 1000 escudos. § Sole Paragraph: If no creditor appears personally or through representative, the syndic will decide on the approval of the account and the remuneration of the manager. Article 1221 – Minutes of proceedings - The deliberations of the assembly shall be recorded in the book and shall be sign by all the creditors present and who want to participate and shall be handed over by the manager to the office of the court to be annexed to the file. Article 1222 – Objection against deliberations - Objection Any interested party may complain against the deliberations taken in the assembly and referred to in the preceding articles, and the objection shall be decided by the judge of the bankruptcy after hearing the syndic and leading evidence which may be necessary. Article 1223 – Disposal of books and liquidation records - After the accounts are approved, the books and other papers concerning the liquidation shall be put in bundles and handed over to the chamber of managers of the bankruptcy, wherever they are available and to be kept in the archives of the respective office. Outside Lisbon and Porto the books and papers shall be compiled in bundles and kept in the Court office with reference of the number of proceedings. SUB-SECTION VII PAYMENT TO THE CREDITORS Article 1224 – Payment to secure creditors - After realization of money from the disposal of the assets covered by mortgage or any other security, immediately payment shall be made to the respective creditors up to the limit where the proceeds of the assets is sufficient to pay the creditors and in case the creditors are not fully paid they are included along with unsecured creditors to be shared amongst all, independent of any formality. Article 1225 – Proposal and chart of apportionment - Within 5 days subsequent to the disposal of the estate the manager shall present to be annexed to the file of the insolvency the proposal and chart of pro rata apportionment which he proposes to do.

Such chart shall be open for inspection to the Public Ministry, for 3 days, to give his say on its accuracy and conformity with conditions of verification and marshalling of the creditors and disposal of the assets and thereafter payment shall be ordered of which are found legal and respective cheque shall be issued. Article 1226 – Partial and successive apportionment - Before the liquidation of the total estate, it is incumbent to make pro rata apportionment whenever there is a deposit of amount which secures apportionment of not less than 5%. § 1: The operation of the apportionment shall be repeated as soon as new liquidations come into plea either are to be attended in view of favourable disposals of the appeals or success in the pending suits. § 2: There having been excess in the liquidation, at the end, of such small amount which may not be sufficient to cover all the expenses of the fresh apportionment, the administrator may permit that they be credited to the funds of any charity establishment in the judicial division and if there is none, in the funds of the court.

Article 1227 – Reserve for costs, stamp duty and expenses - The payments referred to in the

preceding articles and of article 1224 shall be directed in such a manner that there always is a deposit of 25% of net product of each of the properties, for the security of costs, stamps and other expenses which shall be calculated at the end. Article 1228 – Regime to be observed when the verification is not final - When there is an appeal pending against judgment of verification and marshalling of credits or protest on account of pending suit, it is considered that the respective credits are asserted conditionally to be attended in the apportionment at later stage. After the final judgment is delivered and if it is favourable to the appellants or protesters, they shall withdraw the amounts to which they have rights; if not, again there shall be pro rata apportionment amongst the creditors. § Sole Paragraph: Whoever by his appeal or protest had stopped the withdrawal of any amount and thereafter is not successful, shall indemnify the estate paying the interest for the delayed payment.

Article 1229 – Mode of payment in extra judicial liquidation - All the payments arising from disposal of assets outside the court shall be made by way of cheques issued in favour of the account of the court. SUB-SECTION VIII ACCOUNTS OF THE ADMINISTRATION Article 1230 – When does the administrator have to furnish accounts - The manager shall present his accounts within 10 days after his administration comes to an end and besides wherever he has been directed to do so and the time may be extended if there is a legitimate ground. Article 1231 – Procedure to compel rendering of accounts - If the manager does not voluntarily render the accounts, he shall be served with the notice, suo-moto or upon the application of any creditor, of the debtor or of the Public Ministry, in order that he presents them within the period of 10 days and failing which, they shall be prepared by head of the office of the court, taking into consideration the proceeds of the liquidation and expenditure authorized and justified in the proceedings. Once the accounts are liquidated in the manner indicated in this article, the administrator shall be directed to pay the short fall which arises that from and shall loose the right to the remuneration. Article 1232 – Cases in which accounts are rendered by heirs or representatives of administrator – In the event of death or disappearance or the manager having become incapable, the accounts shall be rendered by his heirs or representatives.

Article 1233 – Organization of account – The accounts shall be submitted in the form of a

current account showing at the end all the income and expenditure, wherefrom easily the position of the estate of the debtor are depicted and before they are presented they shall be submitted for the appreciation of the administrator, in order that he expresses his opinion thereon. The accounts shall be accompanied by all the supporting documents, duly numbered and different items of the accounts indicating the number of the documents which support them.

Article 1234 – Chart to be presented by Court office – After the receipt of the accounts, they shall be processed by way of appendage, and thereafter the office shall produce one map indicating the dates of principal acts of the insolvency in which the manager has intervened, total amount of the pro rata payments and amount which is recovered from the different parts of the assets.

Article 1235 – Summons to the creditors, the insolvent – say of the syndic and Public

Ministry - After satisfying what is provided in the preceding articles, summons shall be issued to the creditors and to the debtor by publication of 8 days, in order to give their say on the accounts, and for this purpose the syndic as well as the Public Ministry shall have right to give their say and thereafter file will be placed before the judge for trial. SUB-SECTION IX PREVENTIVE REMEDIES TO SUSPEND THE INSOLVENCY DIVISION I INSOLVENCY COMPOSITION SUB-DIVISION I GENERAL PROVISIONS

Article 1236 – Who can initiate a composition - A businessman debtor or his heirs and

representatives may enter into with composition with lawful creditors of the debtor, without privilege or preference, not less than absolute majority, representing, at least 2/3 rd or 3/4 th " of totality of the credits also neither preferential nor privileged, as per the balance sheet and he may also propose to one group of the creditors by his exclusive initiative, in accordance with steps provided in this sub-section. § Sole Paragraph: The composition is preventive or suspensive, depending upon whether it is presented to the court before or after the declaration of the bankruptcy.

Article 1237 – Number of creditors and credit representation required to admit composition – In order that a proposal of composition be admitted it is necessary that the same may be accepted by absolute majority of the creditors and that the acceptors represent 2/3rd of totality of the credits reflected in the balance sheet, if the percentage offered is 50% or higher than that and 3 quarters if the percentage is lesser. Article 1238 – Need of fresh consent in case of death of proposer - In the event of death of the proposer before the final approval of the composition, the same shall not be approved without fresh consent of the creditors as per legal number and representation. Article 1239 – Bar on composition by charged or convicted businessman - To the businessman who is charged or convicted by the offense of fraudulent insolvency it is not open to propose composition until the charge is against him is pending or redeemed or pardoned. Article 1240 – Bar on new composition before lapse of one year - No fresh composition shall be admitted unless one year passed after complete fulfillment of the previous composition. Article 1241 – Effect of approval of composition - The approval of the composition is compulsory to all the creditors without privilege and without preference, including those who have not put forth their claims for the verification of their credits or have not been indicated in the balance sheet of the composition provided that they are previous to presentation of the same to the court, even though the actual fulfillment of the obligations becomes effective at subsequent date. Article 1242 – Form and registration of composition - The proposal of composition shall be submitted by way of authentic document or authenticated document and shall be provisionally registered in the office of conservatory of the commercial registration, at the instance of the Public Ministry as soon as order is passed on the application showing the receipts. Such registration shall be converted into definitive or cancelled depending upon whether respective composition is approved or rejected by judgment which has become res-judicata. Article 1243 – Bar on suits or executions - After receipt and registration of the composition, and until the same is not rejected, no creditors by a previous credit figuring in the balance sheet

shall file suit or execution nor prosecute the party to the composition. The creditors for the credit not figuring in the balance sheet are not entitled, even though they have obtained the judgment, to prosecute or continue with the pending execution. § Sole Paragraph: From those are excepted when there is no bankruptcy declared, the privileged creditors and preferential creditors, except if they have accepted the composition for any such credits. The seizure, attachment and judicial mortgage do not turn the respective credits into preferential. Article 1244 – Insolvency of the applicant - or party to composition - Upon the receipt of the approved composition, the creditors with credit previous to presentation of the composition may apply for declaration of bankruptcy of the applicant or party to the composition, in case of escape or absence from the establishment, in accordance with clause no. 2 of article 1136, or if he, on account of dissipation or loss of assets or by any abusive conduct, demonstrates manifest intent to defraud the creditors and to frustrate the fulfillment of the obligations of the composition. § Sole Paragraph: To the declaration of bankruptcy in cases covered by this article objections may be raised, meant to challenge its grounds, within the period and by the procedure laid down in articles 1147 and following. Article 1245 – Rights of creditor by instrument of joint liability who accepts composition

with any other joint debtor - The credit by way of bills of exchange or by any other debt

instrument with joint liability who accepts the composition with any other joint debtor retains his right against the remaining in relation to parties to the composition, being liable for the difference between percentage of composition and the totality of the liability. Article 1246 – Consequences of the acceptance of composition by a privileged or preferred creditor - The creditor who accepts the composition, looses right to any preference or privilege which was entitled, except where the acceptance is limited to other joint credit.

Article 1247 – Sanction against private agreement contrary to the composition - All the

agreements or contracts made by the debtor with the creditor who had accepted the composition contrary to or beyond what is stipulated in the composition are null and void. § Sole Paragraph: The creditor who got from the proposer of the composition any special

advantage over other creditors shall be directed to make payment in their favour, one some equal to 5 times the benefit obtained. Article 1248 – Issuing of bills of exchange or promisory notes pursuant to composition - After the judgment approving the composition had become res judicata, the debtor, party to the composition visa vis that to any other creditor who are subject to the same and seek enforcement are bound to accept the bills of exchange or promissory notes for the amount and period agreed upon as per the composition shall have right, it being incumbent that in each of the such debt instruments may express mention what is the amount as per the composition and what is the percentage was obtained in relation to the original credit which shall be specifically mentioned. § 1: If there is more than one installment to be paid, specific mention shall be made of the number of the instrument in respect of each of them. § 2: When the party to the composition has accepted bills of exchange or issue promissory notes in accordance with this article, the creditor is liable to deliver to him the receipt of such instrument.

Article 1249 – Insolvency resulting from rejection of composition - The judgment which

rejects the composition shall declare at the same time the bankruptcy of the applicant or shall proceed with further steps if such declaration made. § Sole Paragraph: If the composition is rejected in appeal, the bankruptcy shall be declared by the Trial Court. Article 1250 – Need to justify regular investments of amounts in balance sheet - The party to the composition who becomes bankrupt before payment to the creditors of the respective percentages shall justify the regular investment of the amounts as per the balance sheet read with the composition, failing which the bankruptcy will be classified as fraudulent. § Sole Paragraph: The creditors of the amount prior to presentation of the composition, who accepted it, are not entitled to compete with bankruptcy save and accept towards the amount which has not received the stipulated percentage, and those who have not accepted it may compete for whatever they have not received from the totality of their original credits.

SUB-DIVISION II PREVENTIVE COMPOSITION

Article 1251 – Requirements - A proposal for a preventive composition is not admissible,

wherein the debtor offers percentage below 40% of the totality of the amounts payable in the two subsequent years or at 50% if the period is longer, but not beyond 3 years. § 1: If the payment of the percentage offered is to be tendered within 2 years, at first stage shall be payment of minimum 1/3 rd ; if the payment is to be done for period of 3 years, in the first year minimum 1/5 th is payable and in the second year minimum 1/3 rd . § 2: The concession on the composition may be granted by the creditors subject to the clause “reserving right for better fortune”, which shall have effect for a period of 20 years. § 3: The debtor who has subjected to the clause referred to in the preceding paragraph shall be liable to make the payments proportionately to the creditors parties to the composition, without prejudice to the new creditors who shall have preference. Article 1252 – Competent Court - The proposal of the composition shall be presented to the court of the jurisdiction where the businessman has his principal place or in the absence of the same, of his domicile and which shall contain the indication of the percentage offered under period and manner as to how the payment shall he made. § Sole paragraph: The proposal shall be accompanied by balance sheet of the credits and debts and nominal list of the creditors, with the indication of their domicile and nature and quantum of the credits. Article 1253 – Production of books of accounts - With the proposal of the composition the party to the composition shall present his books relating to the last 3 years of his business or period which he has exercised, if it is more recent. § Sole Paragraph: The books shall be immediately closed writing therein by the office the record, it shall be signed by the judge and the same shall be handed over back to the debtor, who shall be liable to produce them in the manner provided in this subsection.

Article 1254 – Notice to debtor to accept the composition proposed by creditors - When the proposal is on the part of a group of creditors, the debtor shall be notified to declare whether he accepts the same, and in the affirmative, he shall take steps in accordance with previous article and of sole paragraph of article 1252. Article 1255 – Admission or rejection by Court - After the proposal is received, the papers shall be placed before the judge for admission or rejection. The proposal shall be rejected if the same has not been submitted in accordance with previous articles or when on simple perusal of the documents it is found that it does not satisfy the requirements of the law.

Article 1256 – Publication and content of admission order - The order which admits the

proposal of the composition shall be published by way of extract in one of the newspapers largely read in the locality and by affixation of the notice at the door of the domicile of the debtor and in the head office and branches of the establishment and in that following shall be observed: 1. An expert shall be appointed by the court, who shall be the administrator of the bankruptcy, if any; 2. Period shall be fixed, not less than 15 days not exceeding 30 days for the creditors to produce in the office of the court the application indicating the nature, amount source of their credits, supported by documents or declarations that there are no documents; 3. A date shall be fixed, subsequent to the period fixed in the preceding articles, for the discussion of the proposal in the meeting of the creditors, and also time and place where the meeting shall take place. § Sole paragraph: Appeal lies from the order which admits or rejects the composition. Article 1257 – Functions of Commissioner - The commissioner appointed by the court shall

have power to supervise the acts of the debtor in the administration of the business and

management of the properties during the proceedings of the composition, and specially; 1.Issue under due registration, in the 8 days subsequent to his appointment, notices to all the creditors, informing them the period fixed in the clause no. 2 of the preceding article and of the date and time when the meeting shall take place;

2. To propose to the court the steps which are found fit to safeguard the interest of the creditors, when there may be apprehension of loss or dissipation of the properties; 3. To examine the commercial books of the debtor and express well reasoned opinion on the request for permission of the court to alienate the properties, in accordance with subsequent article; 4. To prepare and annex to the file, three days before the meeting of the creditors the report, with reasons, about the economic position of the debtor, the manner in which he administers his business, the causes which gave rise to the request for composition, the veracity of the credits indicated by the debtor or claimed by the creditors, possibility of fulfillment of the composition and as well as all other facts which may be useful to the creditors and may have influence in the decision to be taken in the respective meeting. In the report the commissioner shall express his opinion over the commercial bookkeeping of the debtor and its reflection in the balance sheet presented. Article 1258 – Position of the debtor during pendency of proceedings - During the proceedings of the composition, the debtor retains the administration of his assets and of the running of his business, under the supervision of the commissioner appointed by the court; he however is not entitled to alienate or create burden on the immovables without permission from the court, preceded by opinion of the commissioner, nor dispose gratuitously any properties or rights, except for fulfilling a prior or subsequent obligation to provide alimony. § Sole paragraph: A breach of what has been provided in this article gives rise to the declaration of the bankruptcy and to the acts, the provision of article 1159 is applicable.

Article 1259 – Production of Books - During the period which runs from the time of the

proposal till the meeting of the creditors, the debtor shall make available his books to any creditor who desires to examine the same. § Sole Paragraph: The creditors also are liable to produce their books in the court or outside the court for the clarification by the commissioner in relation to all transaction with the debtor. Article 1260 – Functioning of creditor’s meeting - The meeting of the creditors referred to in no. 3 of article 1256 shall take place in the court hall under the chairmanship of the judge and its

work shall begin with the reading of the report of the commissioner, followed by discussion and voting on the proposal of the composition. § 1: The debtor is bound, save legal impediment, which shall be justify within 3 days, to appear in person at the meeting, and he may be assisted by an advocate, and he shall furnish all the informations and clarifications which may be sought, failing which it will be deemed that he has withdrawn his proposal and after the lapse of the period for the justification, he will be declared immediately to be in the status of bankruptcy. § 2: The votes of the creditors shall be mentioned in the records giving their names and which will be signed by all who have accepted the proposal. Article 1261 – Approval of composition or adjournment of meeting - When all the creditors are present by themselves or through their attorney, and there being unanimity, the composition shall be approved by the court, if at the discussion the necessary majority in number or capital vise, is not present, the meeting may be postponed for further 15 days, upon application of the debtor and recording however in the minutes the names of the creditors who have accepted the proposal, and they are not entitled subsequently to modify-their votes. Article 1262 – New meeting - In the fresh assembly final voting may be done and the debtor may produce till that date or on the date, the acceptances proved by authentic or authenticated documents, of the creditors who do not want or are not in position to attend. If the composition does not secure the legal majority, the file will be presented to the court to declare bankruptcy which shall be continued in the proceeding of composition. Article 1263 – Objections to composition - If the composition is accepted by the legal majority, the creditors who have not accepted it, may within next 8 days file objections individually or collectively expressing their views against the composition. Within same period objections may be presented by the Public Ministry, who shall be notified for such purpose. § Sole paragraph: In the objections, the existence, nature or quantum of any credit may be raised and which has bearing in the acceptance of the proposal and they may raise the ground to reject the proposal because the assets of the debtor are disproportionately low with the consent arrived at in such a manner that which is not give effect to the composition.

Article 1264 – Contesting the objections - Within 5 days subsequent to the period fixed in the previous articles, the applicants may or the creditors may contest the objections filed, following the steps what is provided for the decision on the verification of the credits. Article 1265 – Time limit for approval or rejection - The approval or rejection of the composition shall take place within 10 days subsequent to the presentation of the files for delivering the judgment. Article 1266 – Appointment of supervisory council and its attributes - In the judgment which approves the composition, a fiscal council shall be appointed, made up of three major creditors residents in the judicial division and of the recognized moral fitness. It is the function of fiscal council to see that the composition is given effect to, and he may apply for rescission where ever is admitted by law or declaration of bankruptcy when any of the circumstances foreseen in article 1244 takes place, without prejudice to the exercise of the equal right by any creditor individually. § Sole paragraph: In order to perform its duties it is lawful for the fiscal council to examine the books of the debtor wherever it is found necessary. Article 1267 – Consequences of approval - Once the composition is approved, the powers of the judicial commissioner comes to an end and the debtor shall regain his right of the disposition of his assets and free management of his business, without prejudice to the supervision as provided in previous article. § Sole paragraph: The judicial commissioner shall have remuneration which is fixed by the judge after hearing the debtor and it shall not exceed 2% of the assets. Article 1268 – Consequences of rejection - The Judgment which rejects the composition shall declare also the bankruptcy of the applicant. The composition shall always be rejected when it is found that it was accepted by some presumed creditor, that the credit of any creditor who had accepted it, was purposefully raised or that respective balance sheet was intentionally omitted or reduced the credit of any true creditor. Any of such cases the debtor shall be charged for fraudulent bankruptcy and as accomplice, the

assumed creditors or with purposefully increased credits. § Sole paragraph: What is provided in sole paragraph of article 1249 shall be applicable in this case. Article 1269 – Liability for objections in bad faith - The objector applicant who fails and it is satisfied that he has acted in bad faith or he has employed means to secure from the debtor any advantage over the other creditors, shall be punished with fine and damages as per general law.

Article 1270 – Appeal - Appeal lies from the final judgment which approves or rejects the

composition. SUB DIVISION III SUSPENSIVE COMPOSITION Article 1271 – At what stage suspensive composition may be proposed - Once the bankruptcy is declared, it is lawful to present composition after the judgment of trial court is passed with verification of the credits.

Article 1272 – Requirements - Suspensive composition is not admissible with a percentage

lower than 30% of the credits, unless accepted by totality of the creditors. § Sole paragraph: The payment shall be done within a period of not more than 3 years and what is provided in paragraph 1 of article 1251 shall be applicable. Article 1273 – Form of acceptance - The acceptance of the composition by the creditors, jointly or severally shall be prepared in a document authentic or authenticated. Article 1274 – Duty to apply for approval - Whoever has secured from the creditors suspensive composition shall apply for its approval, and article 1252 shall be followed. Article 1275 – Order of acceptance or rejection - When the composition is produced in the proceeding of bankruptcy, order shall be passed accepting the same, except whereby plain

inspection of documents it is found not to satisfy legal requirements. § Sole paragraph: Appeal shall lie from the order which accepts or rejects the composition. Article 1276 – Effect of acceptance - The acceptance of the composition suspends the proceedings of the bankruptcy till they are approved or rejected, except as far as prosecution of the bankrupt and its effects.

Article 1277 – Notice to creditors to object - After accepting the composition, notice shall be issued to uncertain creditors and also to creditor who are certain but have not accepted it, by publication of 30 days published in the official gazette and newspaper of the locality, to file by means of objections whatever they consider as of their right in respect of the composition, and for that purpose the creditors who are certain shall be given notice by registered letters. The Public Ministry may also file objections within same time which shall be notified to it. § 1: The registered letters shall be sent by the applicant, who shall produce the list of the creditors who have been served the notice, with indication of the numbers of the respective postal registration to each of them and such document shall be preserved until rejection or approval of the composition if so directed. The absence of such notice is not ground for objection. § 2: If, within 30 days from the date of notices the proponent does not produce in the file documents of official gazette and newspaper with the publication of the notices, the office shall present the file to the judge and thereupon judgment will be passed rejecting the composition and directing that the file follows the ordinary steps of the bankruptcy proceedings. The same procedure shall be followed when on account of the fault of the debtor, the proceedings are not prosecuted for more than 30 days. Article 1278 – Say of the administrator - Within the period of publication the administrator of the assets shall give his opinion duly supported with reasons over the legal condition of the composition and possibility of its fulfillment.

Article 1279 – Contesting of the objections - After the period for objections is over the

applicant may within next 5 days, contest the same, and for remaining the steps prescribed for verification of credits is to be followed.

Article 1280 – Composition proposed by creditors or administrator - The composition with suspensive effects may also be proposed by the creditors or by initiative of the administrator of the bankruptcy. The debtor shall be notified to declare whether he accepts and, in the case of acceptance, immediately date shall be fixed for the assembly of the creditors, by observing, for further steps, what is provided in articles 1260 and onwards. SUB-DIVISION IV ANNULMENT AND RESCISSION OF THE COMPOSITION

Article 1281 – Annulment of composition - The composition may be annulled by the court

which has approved it, on the application of the creditor who by subsequent judgment which has become res-judicata, proves the existence of credit previous to presentation of the composition, when such credit has bearing in the legal representation as required in the article 1236. § Sole paragraph: The annulment releases the sureties and extinguishes any security furnished for the composition. Article 1282 – Rescission - The composition may be rescinded by the court which approved it, on the application of any creditor, when the debtor has failed to comply with any of the obligations stipulated therein. Before passing the judgment of rescission, the debtor or his surety may, or any other creditor party to the composition, who put an end to the case, satisfying to the applicant whatever was

falling short in that and paying the costs.

§ Sole Paragraph: The rescission does not exonerate the sureties nor extinguishes any security furnished for the composition. Article 1283 – Notice to contest - Once the annulment or rescission of the composition has been applied for, the debtor party to the composition shall be summoned and in case of the rescission, also the surety if there is one, within 5 days to contest, if willing, on pain of being ex-parte. After the expiry such period, with or without defence, the rescission will be ordered.

Article 1284 – Consequence of annulment of rescission - Once the composition is annulled or rescinded, the steps of proceeding for bankruptcy shall be followed and whenever the debtor has not been declared bankrupt, simultaneously the declaration of bankruptcy will be passed by the judgment. Article 1285 – Appeal from Judgment - From the judgment of annulment or rescission of the composition appeal lies. DIVISION II AGREEMENT AMONGST CREDITORS Article 1286 – Terms and requisites of agreement - The creditors of any businessman, whose bankruptcy has been or is in the condition to be declared, may, with the exemption to pay transfer tax and application of paragraph 1 and 2 of article 4 of law no. 11/04/1901, constitute a society by way of shares on the following terms; a) In the constitution of the society the creditors who have taken part or intervened in the agreement shall take part and other parties may also participate; b) The shares of the creditors shall be represented totally or partially by what is corresponding to their credits, with the deduction of subsisting liabilities with whom they have made composition and also may enter other persons with whom they have not entered into agreement; c) The society shall retain the assets of the businessman to the extent it exceeds the payment of creditors with privilege and with preference; but the creditors who had taken part in the composition propose to retain the properties of the debtor over which there is preference or privilege they shall effect the respective payment or furnish the security for integral payment of the debt at the time of maturity, d) The society shall be liable to satisfy the unsecured creditors who have not accepted the percentage fixed in the composition and for them the period of the payment shall be in accordance with article 1251 and 1272. § 1: The agreement is acceptable only of it has been accepted by absolute majority of creditors without privilege or without preference who represent 2/3 rd of the unsecured creditors. § 2: The document of the agreement shall contain the clauses of future agreement with the society.

Article 1287 – Time after compliance - Where there is a composition already approved by the court, no agreement with the creditors shall be accepted until passage of more than 1 year after full compliance with the former agreement. Article 1288 – Applicability of provisions relating to compensation - The agreement shall, for all the purpose deemed as preventive composition or suspensive composition, as the case may be, and shall be governed to the extent applicable by the provisions of the previous division with the exception of non application of the provisions relating to judicial commissioner and fiscal council and assembly of the creditors and all others which are contrary to what is provided in this division.

Article 1289 – Duty to seek approval of court - The creditors who have taken part in the

agreement may apply for approval from the court and for that purpose one or more creditors who are parties to the agreement may be represented by any one of them while moving the application. Article 1290 – Notice to contest - After the agreement is received, notice shall be issued to the debtor whose consent has not been taken to file objections by way of authentic document or authenticated and for same purpose the creditors who have not taken part in the agreement, shall be called even though they are privileged or with preference, and the provisions of article 1277 shall be applicable. Also objections may be filed by the creditors of the share holder of limited liability of debtor society. § Sole paragraph: Further adhesions of the new creditors are admissible until the time fixed for filing objections.

The ground of objections may, in particular be that the creditors who have not taken part have inferior advantages therein to liquidation in the proceedings of bankruptcy.

Article 1292 – Proposal to increase percentage - Until the deliberation of the tribunal, the

creditors who accept the agreement, may propose increased in the percentage offered to the creditors who have not accepted it and in such case the approval shall embrace new percentage.

Article 1293 – Means to avoid annulment - If there is an application for annulment of the

agreement based on article 1281 read with paragraph 1 of article 1286, the accepting creditors or the society constituted by them may, in terms of sole paragraph of article 1272, offer the payment which probably will be the same as the amount he would get in case of liquidation in bankruptcy proceedings. The applicant shall be notified in the proceeding of approval of the agreement to, within 5 days, dispute the amount offered by way of objections failing which the claim for annulment shall be of no effect. If the creditor files objections, the same may be contested within 5 days subsequent and thereafter without any further pleadings the procedure of article 1144 shall be applicable. Article 1294 – Effect of judgment which dismisses petition for Insolvency or revokes

Insolvency declaration - The final judgment, which holds non maintainable the prayer for

declaration of bankruptcy of the businessman debtor or for revoking the judgment, which has granted such declaration, extinguishes such approval or annuls the same if there has been already approval. § Sole paragraph: The receipt of the agreement does not suspend the appeal from judgment which has been filed, of the objections opposing the judgment of declaration nor the appeal from decision passed on the appeal from judgment or in the objections. Article 1295 – Rescission of agreement - The agreement may be rescinded only on the application of the creditors who have not accepted such agreement, where there is non compliance with the obligations stipulated therein. Article 1296 – Consequences of failure of society constituted by agreement amongst creditors - The bankruptcy of the society created in accordance with previous articles amounts to bankruptcy of the businessman debtor, save where the facts which cause it are of exclusive responsibility of the society.

DIVISION III MORATORIUM Article 1297 – Who can propose moratorium - Before declaration of bankruptcy, or thereafter once the judgment with verification of the credits is passed the debtor may propose moratorium to his creditors non preferential nor privileged and may propose also to a group of creditors, on his own initiative in accordance with provisions prescribed in the following articles. Article 1298 – Requirements of moratorium - The moratorium must be accepted by majority of creditors who represent, at least 2/3 rd of totality of the unsecured creditors, if it is for 1 year and 3/4 th if it is for larger period, never exceeding 3 years.

Article 1299 – Regulation of moratorium - The provisions of substantive law as well as

procedure law which govern composition shall applicable to the moratorium to the extent no contrary provisions is found in this division. SUB SECTION X CLASSIFICATION OF BANKRUPTCY Article 1300 – Kinds of Bankruptcy - The bankruptcy shall be classified, depending upon the circumstances, as casual, negligent or fraudulent. Article 1301 – Casual bankruptcy - The bankruptcy is casual when the bankrupt having acted with honest diligence in the management of the business. Article 1302 – Bankruptcy due to negligence - Bankruptcy is negligent when it arises from carelessness, recklessness or prodigality on the part of the bankrupt, when has disposed substantial part his business in gambling, and the bankrupt has failed to fulfill the provisions of the law which mandates regularity in book keeping and commercial transaction except if the restriction in the business and rudimentary qualifications of the bankrupt excuse him from non fulfillment of the provisions.

§ 1: A banker who stops payments is presumed to be guilty of negligent bankruptcy. § 2: The presumption of the fault arising from non appearance before the court within 10 days mentioned in article 1139 may be disproved if it is found that there was just impediment.

Article 1303 – Fraudulent bankruptcy - The bankruptcy is fraudulent not only in the case

foreseen in the article 1250, but also when the bankrupt after knowing the impossibility of satisfying his liabilities he pays to some of the creditors his dues or give them means to obtain advantage over others; when there is listing of fictitious or malicious omission of the assets in his balance sheet; when with the purpose of avoiding or delaying the bankruptcy proceedings, has purchased goods on credit with the intention of resale before payment of the debts for a price lower than the current in the market and in the event such resale have taken place; and in general when he shows sham acts or contracts with false dates or by any other manner done in bad faith causing prejudice to the creditors. § Sole paragraph: The bankruptcy of the brokers is always deemed as fraudulent.

Article 1304 – Penalty for fraudulent or culpable bankruptcy - The offence of fraudulent

bankruptcy shall be punished with the penalty of two to eight years of the cellular prison or in alternative, temporary deportation and fine up to one year in both the cases; and in case of culpable bankruptcy with the prison of 2 years. Article 1305 – Proceedings for prosecution of the bankrupt and classification of bankruptcy

• The judge, as soon as goes through the facts which constitute presumption of negligence or fraud, shall direct initiation of prosecution of the bankrupt by way of appendage proceedings and classification of bankruptcy and shall direct that certified copy be annexed and thereafter carrying out necessary steps for inquiring about the truth of the same fact. Article 1306 – Provisional charge - If the allegation of the facts indicating negligence or fraud are made in the initial petition, the court will appreciate the proof at the trial for the declaration of the bankruptcy, and note will be taken of the evidence led by the witnesses on the aspect of proof of negligence or fraud, and the presiding judge after being satisfied that the facts are proved shall pass the order framing provisional charge against the bankrupt and any other offenders and shall order the imprisonment. In the same order, the judge shall direct that certified copies of the evidence of the witness be taken and the answers given by the court as to the facts which constitutes the prosecution and as well as order of the charge and direct that the same be the basis for the prosecution of the bankrupt and classification of the bankruptcy. § Sole paragraph: After initiation of the criminal proceedings, the papers will be placed for the opinion of the Public Ministry and he will further prosecute the matter in accordance with the Criminal Procedure Code. Article 1307 – Framing the grounds of classification of bankruptcy - After the investigation is concluded the file will be placed before the Public Ministry, for 48 hours in order to, within the period of 8 days, if satisfied that no other evidence is required to be led, frame the articles as to the classification of bankruptcy, indicating in detail the facts which demonstrate the liability of the accused persons, indicating immediately the witnesses and other proof on which charges based. Any creditor proving his capacity, if his credit has not been verified may also indicate the articles of classification within the same period. § Sole paragraph: The certificate of criminal record shall be annexed to the file with articles of classification of bankruptcy or within next 10 days for interrogation of the accused in the court. Article 1308 – Acceptance or rejection of articles - After the articles of classification of the bankruptcy are filed the file shall be placed before the judge in order that, within 5 days the articles of charge may be accepted or rejected passing the order of the indictment or maintaining what has been submitted, in accordance with Criminal Procedure Code. If there is no circumstances evidence of the negligence or fraud, the file shall await further definitive classification of the bankruptcy. Article 1309 – Intimation of order of indictment - The order of indictment shall be notified to the Public Ministry, to the creditors who have filed articles of the charge and to the indicted persons after they are detained or set to free on bail, and they may seek counter inquiry and also prefer appeal against the order of indictment in accordance with the law of Criminal procedure and in such case the appendage file prosecuting the bankrupt will sent to the superior court.

Article 1310 – Attachment of proceedings - If from the certificate of the criminal register

record it is found that the bankrupt or any other criminal has been prosecuted in different court for the offence to which equal or lesser punishment is awardable, request will be made to the other court to send the criminal proceedings to the court of the bankruptcy. If the offence as per the certificate of the criminal register is punishable with higher offence, the papers shall be sent to the court where higher punishment is awardable along with all the relevant papers in order that trail may proceed in the later court. § Sole paragraph: As soon as any criminal proceedings are received they shall be appended and presented for opinion of the Public Ministry, for a period of 48 hours the later shall frame the charge and also classification against the accused for all the offences. Within the same time whoever wants to prosecute the accused for the same offence may frame the charge also except if he has already submitted the charge. Article 1311 – Notice to contest - As soon as the order of indictment framing the charge has become res judicata, all the accused shall be summoned in order that they may submit their defence and produce their list of witnesses. § Sole paragraph: The number of witnesses of the defence shall not exceed the number which the prosecution is entitled to produce. If there are many accused, each accused may produce witnesses up to the same limit. Article 1312 – Summoning by public notices - Any accused who is prosecuted has not been detained nor he has appeared within 60 days from the date of indictment, shall be summoned by way of publication of 30 days in order that within 15 days he may produce his defence and witnesses as per previous article and he is entitled to appoint his advocate failing which the court shall appoint assigned counsel who shall take up his defence until the accused puts in appearance or appoints his advocate. Article 1313 – Adding to or changing list of witnesses - The list of witnesses of the prosecution or of the defence may be increased or changed, provided that the addition or change is notified to the adversary till 3 days before the date fixed for the trial, however, no witnesses will be produced when he is outside the Judicial division except where he undertakes to produce the witnesses independent of summons.

Article 1314 – Judgment - After the steps referred to in the preceding articles are over the trial of the accused shall take place and procedure of Criminal case shall be followed. Article 1315 – Duty of accused to appear - The accused should appear personally for the trial for which purpose they shall be summoned, and when they are absentees notice will be issued by publication. § Sole paragraph: If any of the accused does not put appearance, fresh date for his appearance shall be fixed, issuing warrant against him. If even in the later date the accused does not put appearance, the trial shall proceed ex parte. Article 1316 – Time limit for Public Ministry and Creditor to apply for criminal

proceedings - Within 15 days from the time of publication of the judgment approving the

composition or the agreement or the publication of the order which directed pro rata payment or declare the insufficiency of the assets, the Public Ministry, failing which disciplinary proceedings may start and any other creditor may, whenever he is of the view that the bankruptcy was not casual, may apply for initiation of criminal proceedings for prosecution of the bankrupt and classification of the bankruptcy or further prosecution of the pending proceedings, by observing in one or other case what is provided in articles 1307 and following. § Sole paragraph : When there is no prima facie evidence that there is guilt or fraud, the Public Ministry, shall within the limitation and on the penalty prescribed in this article apply that the bankruptcy may be held as casual. SUB-SECTION XI END OF THE INTERDICTION AND REHABILITATION OF THE BANKRUPT Article 1317 - Circumstances for lifting the interdiction on an insolvent - Interdiction of an insolvent shall be lifted in any of the following cases:- 1.When he has secured a settlement or agreement of the creditors and the judgment confirming the same has become final for want of appeal; 2.If he stands acquitted by full payment or waiver, in respect of all creditors who had claimed payment;

3.After a lapse of 5 years, if the insolvent estate stands extinguished, with complete absence of assets and after effecting payment of 50% to each of the creditors; 4.If more than 10 years have passed, showing payment of 25% to each of the creditors and after verifying the other circumstances of the proceeding sub-clause; 5.After lapse of more than 20 years and the insolvent estate being in the same way found to be totally inexistent and complete absence of assets. Article 1318 - Rehabilitation of the insolvent - After lifting of the interdictions the rehabilitation of the insolvent shall also be decreed, when the insolvency has been classified as casual or when he has complied or the penalty which has been incurred by him by reason of the insolvency been due to his default or fraud has been lifted. Article 1319 - Procedure for lifting interdictions in cases under article 1317(1) - The lifting of the interdiction in the case of art.1317 and the rehabilitation of the insolvent shall be decreed on the application of the interested party who must annex the document. Article 1320 – Lifting of Interdiction in other cases - Whenever the vacating of interdiction is applied for in any of the other grounds of article 1317, after leading the evidence and hearing the administrator, if any, papers will be presented for the period of 48 hours to the Public Ministry, thereafter the proceedings will be placed before the court for orders. § Sole paragraph: From the judgment which has passed on the request on the bankrupt or his rehabilitation appeal lies. Article 1321 – Proceedings in which one should apply - The vacating of the interdiction and rehabilitation of the bankrupt may be applied for only in the proceedings where such bankruptcy has been declared. SUB-SECTION XII SPECIAL PROVISIONS IN RELATION TO THE SOCIETIES Article 1322 – Separation between Insolvency of Society and its member - The declaration of the bankruptcy of one or more members of a society does not imply the bankruptcy of the society.

Article 1323 – Powers and duties of administrators - The directors, administrators or managers of the societies of limited liability are subject to the obligation which in the proceedings of bankruptcy apply to the singular bankrupt; they shall be heard in case the law demands that the bankrupt should be heard; and they have locus standi to oppose the objections against bankruptcy and to refer the same appeals which the individual bankrupt is entitled to file.

Article 1324 – Effect of Insolvency of society on members with unlimited liability - The

judgment which declares the bankruptcy of a society shall also declare the bankruptcy of all the members with unlimited liability. § 1: For the purpose of present article, the application for declaration of bankruptcy of the society shall declare the name, domicile, parish and Judicial division of origin of each of the members with unlimited liability who constitute the society. § 2: Where ever in a case of dissolution of a society it is provided that one or some of the members are exempted of the liability toward the debts, such an understanding though binding in between contracting members, will not come in the way of declaration of bankruptcy of the former, within the period fixed in article 1137 for debts prior to the said dissolution. § 3: The declaration of bankruptcy of one member may be objected on the special ground that the bankrupt does not satisfy such a capacity. § 4: If after the declaration of bankruptcy it is found that there are other members beside those who have declared to be bankrupt, by judgment such declaration shall be made applicable to them also. Article 1325 – Effect of bankruptcy of society for negligence or fraud on its administrators - In the event the bankruptcy of a society with limited liability is classified as fraudulent or negligent, its directors, administrators or managers, as well as their accomplices, shall be indicted and tried in accordance with articles 1309 onwards. Article 1326 – Petition for voluntary declaration of Insolvency - For the purposes of voluntary declaration of the bankruptcy the application shall be in writing by any member with unlimited liability or by respective administration; but, beside the documents prescribed in article 1140, there shall be also meeting of general assembly in which deliberation is taken for voluntary winding up.

Article 1327 – Unity of administration and operation of assets - The administration of the assets of the society shall be only one, but the assets shall be listed, preserved and quantified separately from those belonging to each of the members. § Sole paragraph: The creditor of the society shall be heard in respect of the assets of the society and they and personal creditors of the members in respect of the assets of the latter. Article 1328 – Objections to voluntary liquidation - The declaration of the bankruptcy of a society in collective name, in mixed, per quotas, the application having been made for voluntarily winding up to the court, may be objected by any member who had voted against the voluntarily winding up. Article 1329 – Rights of instrument holders - The bearer of the instruments of a society in the status of bankruptcy shall contribute to the respective bankruptcy assets by the face value of the instrument when known or when not known by nominal value of the obligations and there from deduction has been made to the extent there is amortization. Article 1330 – Distribution of proceeds amongst creditors of the society and of the members

• There being creditors of the society and creditors of the members with joint and unlimited liabilities, the former shall be paid in preference to latter by the proceeds of the assets of the society, after satisfaction of the claims of any privileged creditors or credits backed by mortgage. If after payment to the creditors of the society, there is any balance in the assets of the society, such excess shall be distributed pro rata between different members in proportion of their participation in the society and their ratio of share-holding. Article 1331 – Concurrence between corporate and private creditors - When however the assets of the society are not sufficient for the full payment to the creditors of the society they shall concur with private assets and in each of them for restitution of their advance in order that they are apportioned pro rata between creditors of the society and private members. § 1: If the sum total of the percentages of the creditors of the society in different assets, exceed the totality of the credits which are due, the later shall withdraw only original amount of such credits and the excess of over it shall be distributed by assets of the private members in proportion of their entry to the total mass. § 2: If the share to be liquidated belongs to each mass the proceeds shall be added to the private creditors and then it will be pro rata apportionment amongst the latter. Article 1332 – Payment to society creditors from members’ assets - If the total percentage towards the credits of the society in different assets is not sufficient to pay the creditors and there

Article 1333 – Duty to compel members to contribute - If the members have not applied for, at the time of declaration of the bankruptcy and agreed to share whatever is their liability, the

composition to the society or to one or more members of unlimited liability. In the last case, assets which are not of the society but are of the members who have agreed to pay shall pass through the assets of the society and he shall not be liable to fulfill the obligations as per the composition and he shall be freed from joint liability vis-a-vis creditors of the mass. Article 1335 – Composition to societies with limited liability - To the creditors of a society with limited responsibility, it is lawful to grant composition to the social entities. The credits represented by the bearer instruments shall participate as general credits for calculation of percentage in the capital as required by article 1237; but for the purpose of calculation of numeric representation required by the same article, claim shall be considered only along with other creditors, bearers of the obligations which are supported by respective instruments figure in the composition.

Article 1336 – Special laws saved - The provision of the special laws governing specific

societies are saved from the former provisions.

SUB-SECTION XIII SPECIALTIES OF THE BANKRUPTCIES OF SMALL BUSINESSMAN Article 1337 – Limit to value for bankruptcies subject to summary terms - In the bankruptcy value of which does not exceed 50,000 escudos the procedure laid down in this section shall be followed with the modifications embodied in the following articles. § 1: The valuation of the bankruptcy, for the purpose of this articles, shall be the assets of the businessman which is found from the balance sheet produced by him, or which is indicated in the petition, in the event bankruptcy has been applied for by any other creditor or by the Public Ministry. § 2: In the event any stage of the proceeding it is found that the valuation of the assets is superior to that fixed in this articles, for purpose of subsequent steps what is provided in the preceding subsections shall be followed. Article 1338 – Speciality of Judgment - The trial of the bankruptcy shall be conducted by single judge, even in case it has to be preceded the hearing of the indicted and shall be concluded in the period of maximum 5 days from the date of the receipt of the petition. Article 1339 – Exemption from publication in Government Gazette - The publication of the judgment declaring the bankruptcy is exempted; however the formalities prescribed in article 1144 shall be followed. Article 1340 – Seizure and sealing - The seizure and the imposition of the seals, whenever takes place, shall be done, upon the order by the office, with the intervention of the administrator and of arbitrator appointed by the judge, and formalities prescribed for attachment shall be observed. See also Article 838 and followings of this Code. Article 1341 – List of creditors and certificate of encumbrances - The administrator in the next 3 days following the exhibition or seizure of the writing, shall present in the office the list of the creditors reflected in the writing or of which he has knowledge, indicating the respective

residencies and the amount of the each credit, and then shall produce, as soon as possible the certified copies of the encumbrances referred to in article 1182 and issuing notice immediately by registered post to the creditors whose names are found. Article 1342 – Time of filing claims - The time for filing the claims of the creditors shall not exceed 15 days, counted from the date of the first publications of the notices in the newspaper of the locality. Article 1343 – Bar of suits for verification, restitution and separation - All the credits against debtor’s estate shall be verified by the proceeding of filing the claims, and may only be presented by way of the suits referred to in article 1196 if the creditor within the time for putting the claims is found absent from the continent or island where the proceedings are pending. Article 1344 – Bar of letters and summons to witnesses - In the claims for credits and their contestations by registered service is not to be undertaken or for leading evidence and the witnesses shall not be notified for appearance but shall be produced by the party who has indicated them.

Article 1345 – Fixing of trial and judgment - After the time to present the claim of the

creditors, the file shall be put up before the court in order that within 24 hours order will be pass fixing the date within next 8 days for the trial. § Sole paragraph: The office, within 48 hours immediate to the receipt of the file, shall, by registered letter with acknowledgement due issue notice to the creditors who have put the claim and any other creditors whose names are found in the file communicating to them date time and place for the conducting the trial and till that time the file will be in the office for purpose of examination by any person who may have interest therein. Article 1346 – Report of administrator - At the trial the administrator shall present a concise report in which he shall indicate the status of the estate and express his view on which date the status of bankruptcy started and its causes. In such report, it shall be read by the officer at the beginning of the trial, the administrator shall express his views over claimed puts by the creditors,

indicating to any others existence to which has come to his notice and it appears to be true which will be supported by his opinion. Article 1347 – Till when credits can be contested - The contestations of the credits shall be filed one day before of the date fixed for the trial. Article 1348 – Oral judgment - The judgment of verification and marshalling the creditors shall passed orally at the trial without narration and transcribe in the record of proceedings. Article 1349 – Time for liquidation - The liquidation of the mass shall be done within maximum period of 45 days which may be extended, only once for a period not exceeding 15 days.

Article 1350 – Ascertainment of percentage to creditors and issuing of cheques - When the

file is sent for drawing up the account, the office shall make the assessment, not only of the cost and stamp duty, but also of the percentage which is payable to each of the creditors and thereafter issuing cheque in their favour of the respective amounts independent of any application § Sole paragraph : The issuance of the cheque shall be communicated to the creditors by way of registered letter, with acknowledgement due and sent to the office; and if the referred cheques are not solicited from the office within period of 1 year from the date of issuance of the letter the respective amount shall be prescribed in favour of the funds of the court. SUB SECTION XIV FINAL PROVISIONS Article 1351 – Intervention of Public Ministry – Public Ministry shall be heard or in cases specially provided for and all the time the judge finds it fit, to say in writing what comments it has to offer in the general interest of the creditors, and for that purpose the file is presented to him for a period of not exceeding 3 days, if specific time has not been fixed; but, when is not the applicant of the bankruptcy, it is not permitted to appeal from the decisions passed in the file, except if it is a case of classification of bankruptcy or of rehabilitation of the bankrupt. Article 1352 – Death of insolvent or creditor - The death of the bankrupt or any of creditors does not stop the prosecution of the proceeding of the bankruptcy.

Article 1353 – Parts of the proceedings - The proceedings of the bankruptcy are constituted of one main proceeding and attached proceeding. § 1: The main proceeding shall start with an application or notice for declaration of the bankruptcy and, besides what is specially prescribed, contain a list with valuation of the properties and the description of the assets and how the payment to the creditors will be done. § 2: Such proceedings shall have following attached proceedings: 1. Objections to the bankruptcy; 2. Verification of the credits and the right to the restitution or separation of the assets and rural properties existing in the mass; 3. Rescission of the acts prejudicial to the creditors; 4. Indication of the bankrupt and classification of the bankruptcy; 5. Compositions or agreements; 6. Accounts of the administration; 7. Any other incidental proceedings which by its exceptional characters, the judge is of the view that it should be processed in separate. Article 1354 – Secrecy of Insolvency proceedings - The proceedings of bankruptcy shall not make public until the bankrupt is notified or heard, nor even what is secret as per penal law. SUB SECTION XV INSOLVENCY OF NON BUSINESSMAN Article 1355 – Definition - A non businessman debtor may be declared as insolvent when value of his assets is less than his debt. § Sole paragraph: If the debtor is married, the insolvency may be declared of both the spouses if the debt were also of the liability of the wife. Article 1356 – Presumed insolvency - The insolvency is presumed: 1. When against the debtor there are two executions not objected to; 2. When there are proceedings of seizure on the ground that there is apprehension of insolvency, and he has not raised by way of objections, sufficiency of his assets or if he has raised it, the objections were rejected.

Article 1357 – Applicability of provisions relating to Insolvency - To the insolvency, there shall apply the provisions of the previous sub sections not related to the exercise of profession of businessman and save what is prescribed in the following articles. Article 1358 – Petition for voluntary insolvency - For the purpose of declaration of voluntary insolvency of the debtor he shall present his application along with inventory and balance sheet, separating the active and the list of the creditors and respective credits. Article 1359 – Insolvency on application by creditors – Notice to debtor - The creditor who proposes to have declaration of insolvency shall formulate his prayer in detail with his grounds justifying the existence of the credit and offering immediately the respective proves. The debtor shall be summoned to within 5 days give his say over the prayer and its grounds. Article 1360 – Appointment of administrator - The judgment which declares the insolvency shall appoint the administrator, who alongwith his inherent responsibilities shall also be the judicial receiver of the seized properties. § Sole paragraph: The administrator of the insolvency shall be one of the administrator of the bankruptcy, wherever is there. Article 1361 – Effect of declaration - The declaration of insolvency has the effect of declaring the incapacity of the insolvent to administer and dispose his assets until total liquidation of his estate, but his previous capacity shall continue for all other acts which do not relate to the administration alienation or burdening of same assets and it has effect of consequent separation of the half share where the insolvent was married under regime of communion.

§ Sole paragraph: The incapacity of the insolvent shall be filed up by administrator and shall

continue until undergoing the penalty in case of criminal punishment. Article 1362 – Grounds of objections - Objections against the insolvency shall be admissible with any of the following grounds; 1. The insolvent has just and legal ground not to make the payment referred to in the judgment of declaration of insolvency;

2. The active is superior to the passive; 3. The insolvent has entered into composition already approved and the ground of insolvency was prior thereto. Article 1363 – Attachment of pending execution – When in any execution instituted against the insolvent the date for auction is already fixed, the same shall take place and the proceeds shall be allotted to the mass. In such case as well as when there is a auction of the assets, the file shall be attached to that of the insolvency and the creditors may claim their credits, within legal period, in the same proceeding of the execution, until the same is not attached thereto or to the insolvency proceeding, within the period fixed for the claim of the credit. § Sole paragraph: The attachment of any proceedings to the insolvency proceedings shall be made independent of any account and payment of cost. Article 1364 – Summoning of wife of Insolvent - After the seizure, the wife will be summoned to seek separation of the assets in accordance with article 1361. § 1: The separation shall be processed by way of attached proceedings, incorporating therein the record of the seizure, to become the description of the assets. § 2: The absence of summons directed in this article involves annulment of all the facts which have been done subsequent to the seizure. The nullity may be raised at any time and also cognizance may be taken suo moto. See also Articles 194 and 195 of this Code. Article 1365 – Liability of Insolvent for unpaid dues - After the mass is liquidated without total payment to all the creditors, the insolvent shall continue to be liable for balance in debt. For the payment of this balance sheet, all the properties of insolvent shall be liable even those are supervening which may be attached in the same proceedings on the application of any creditor whose credit has been verified in the proceeding of insolvency, and thereafter the liquidation and distribution the respective proceeds to the creditors in proportion of their balance. Article 1366 – Composition with creditors - The insolvent debtor or their legal representatives may enter into composition with his creditor, but only when there is declaration of insolvency after the verification of credits is over.

Article 1367 – Penalty for fraudulent insolvency - Fraudulent insolvency shall be punished

with the imprisonment of one to two years. Article 1368 – Applicability to societies - The provisions of this sub section are applicable to the societies of civil nature, which ever may be their form; and in case of fraudulent insolvency, they shall be indicted and trial their respective administrators.