Background and Key Developments & Court Rulings
While the formal court liquidation of Banco Espírito Santo, S.A. remains ongoing before the Lisbon Commercial Court (Tribunal do Comércio de Lisboa), a pivotal court ruling and subsequent court order on August 10, 2023 significantly altered the valuation landscape for remaining creditors.
Privileged Credit Recognition: Following a Supreme Court of Justice decision, the court ruled that the Resolution Fund (Fundo de Resolução) holds a legally privileged credit (crédito privilegiado) which amounting to approximately €1.24 billion, made up of €791.7m Contingent Capital Agreement + €448.9m Interest and fees that the Resolution Fund incurred on funding Novo Banco and funding the Resolution, + €2m other costs.
While the formal court liquidation of Banco Espírito Santo, S.A. remains ongoing before the Lisbon Commercial Court (Tribunal do Comércio de Lisboa), a pivotal court ruling and subsequent court order on August 10, 2023 significantly altered the valuation landscape for remaining creditors.
Asset Shortfall: The total available liquidation estate (massa insolvente) held roughly €171.6m in total asset value (as of 31 December 2022).
Zero Recovery for Common & Subordinated Creditors: Because privileged claims must be satisfied in full before common creditors receive any distribution, the entire estate will be absorbed by the Resolution Fund. Common (unsecured) creditors and subordinated bondholders are set to receive a 0% recovery rate directly from the liquidation estate.
Impact on NCWO Compensation: Under European resolution regulations, the “No Creditor Worse Off” (NCWO) principle guarantees that creditors cannot receive less than they would have in an immediate standard liquidation. By fixing the liquidation recovery baseline at 0%, this ruling enables authorities and secondary investors to determine the maximum compensation payable under NCWO claims without waiting for the liquidation process to officially close.
Admitted Insolvency Claims against the BES Estate:
| Metric / Claim Class | Status / Amount | Expected Liquidation Recovery |
| Privileged Creditor | Fundo de Resolução (Resolution Fund) | Partial (~13.8%) |
| Privileged Claim Ceiling | €1,240,000,000 | Priority Distribution |
| BES Liquidation Estate Assets | €171,600,000 | Fully Exhausted |
| Common (Unsecured) Creditors | Senior Bonds, Unsecured Claims c. €2,2000,000,000 | Not Confirmed |
| Subordinated Creditors | Subordinated Debt, Shareholders | 0.0% |
Bonds with Claims vs. Without
The No Creditor Worse Off (NCWO) compensation is a separate claim against the Fundo de Resolução. That compensation is only available to creditors who meet strict formal conditions.
