Court to assess whether Unbabel insolvency was wrongful

A Lisbon commercial court has opened proceedings to determine whether the insolvency of Portuguese startup Unbabel was wrongful or accidental, a decision that matters because former managers could face bans on doing business if the court finds misconduct. The September 25 order was seen by ECOnews on Portugal’s Citius court portal and cannot be appealed under the law.

The applicant named in the case is Iberis Capital, through two of its funds. Iberis was both a shareholder and a creditor of the translation company founded in 2013. Under Portugal’s insolvency rules, any interested party can request this type of proceeding, provided it is reasoned and identifies the people who may be affected by a finding of wrongful insolvency.

As a rule, once the process is opened, the insolvency administrator has 20 days to submit a documented opinion on the relevant facts and, if applicable, identify the people who should be covered by such a ruling. In Unbabel’s case, the Public Prosecutor’s Office also appears as an applicant on the Citius portal, although ECOnews could not establish whether that reflects only its formal role in the process.

ECOnews could not confirm whether founder Vasco Pedro is directly targeted by Iberis’s request. If the court ultimately classifies the insolvency as wrongful, those affected may be barred for two to ten years from managing third-party assets, carrying out commercial activity or holding positions in companies and other entities. They may also lose claims over the insolvency estate, be ordered to return assets already received, and be required to compensate creditors up to the amount of unpaid claims.

Unbabel’s assets were sold to US-based TransPerfect after the company lost clients as generative AI translation tools spread. According to the case file, creditors include Portugal’s Social Security system, state agency IAPMEI, Google Cloud, Vodafone and PwC, among others. Vasco Pedro declined to comment, while insolvency administrator Pedro Pidwell had not responded to ECOnews by publication.

Originally published at Eco.pt