Insolvency regulations, negotiated with the EU

Insolvency proceedings have recently received several amendments which will come into effect starting today.

Arin Stănescu, the chairman of the National Union of Insolvency Practitioners (UNPIR), stated the following: "These beneficial amendments were made because as part of the loan agreement with the EU, Romania has made the commitment of accelerating the elimination of unprofitable companies from the market. The amended law, which was enacted by president Băsescu, includes important provisions concerning the priority payment of loans taken out by insolvent companies and reduces the time needed for the approval of the reorganization plans".

Arin Stănescu explained that in case the company goes bankrupt, second rank mortgages issued by banks during the insolvency period can be paid first as well even if the company has ongoing first rank mortgage loans which it took out prior to going insolvent. Furthermore, this eliminates the wait for the bankruptcy judge to approve the reorganization plan. Under the new law, the plan will be approved by the assembly of creditors and then confirmed by the judge.

The law also brings changes when it comes to the liability of the administrators of the company that went bankrupt. If the bankruptcy trustee or the liquidator did not indicate the people which are responsible for the debtor going bankrupt, the chairman of the creditors" committee or the creditor who owns more than 50% of the claims against the debtor can also request the sanctioning of the entities responsible for the insolvency of the debtor. The lawsuit concerning this matter can be tried separately from the one concerning the insolvency of the company in question, said Arin Stănescu.

In the first semester of 2010, over 12,000 insolvency requests have been filed by creditors and debtors, following the court rulings published in the Insolvency Proceedings Bulletin. The number has increased by 4,000 compared to the first semester of 2009. 5,000 of the 12,000 bankruptcy cases have been opened at the request of debtors.