ROMANIA: New insolvency and bankruptcy law: More protection for creditors
Law No. 85 of 2014 came into force at the end of June 2014, amending the Romanian legislation on insolvency and bankruptcy
The new law allows a more flexible approach to the process of recovering the State’s debts. The newly introduced “private creditor test” allows the State to participate in the proceedings of reorganisation of the creditor, even if it provides a reduction of its claim, without such reduction of the claim being regarded as State aid.
Position of creditors strengthened
Clearer rules now allow creditors to become involved in the choice of the court-appointed receiver or liquidator. This is to counter previous practice where the debtor in insolvency could impose a receiver convenient to the debtor – a practice that had led to numerous suspicions of fraud against the interests of creditors.
Furthermore, the new law establishes an observation period: It may not exceed one year from the date of initiation of the procedure. In this period a restructuring plan must be approved. If this does not take place, the liquidation procedure must be initiated against the debtor. This rule puts an end to abuses by which the procedure could be extended indefinitely, against the interests of creditors. New rules also apply to the rights of creditors that act as financers under leasing contracts. Within three months of the initiation of the procedure, the financer may choose to take possession of the property, or leave the property to the debtor, instead becoming a creditor whose claim will be paid first. The law offers better protection to creditors who finance the activity of the company during insolvency proceedings. If they are not paid and their claims exceed 40,000 lei for payments due for more than 60 days, they may request bankruptcy and the immediate initiation of liquidation proceedings against the debtor.
ECOVIS Jantea & Partners Law Firm, Bucharest, Romania
ECOVIS AG Steuerberatungsgesellschaft
Ecovis is a leading global consulting firm with its origins in Continental Europe. It has over 4,000 people operating in 50 countries. Its consulting focus and core competencies lie in the areas of tax consultation, accounting, auditing and legal advice.
The particular strength of Ecovis is the combination of personal advice at a local level with the general expertise of an international and interdisciplinary network of professionals. Every Ecovis office can rely on qualified specialists in the back offices as well as on the specific industrial or national know-how of all the Ecovis experts worldwide. This diversified expertise provides clients with effective support, especially in the fields of international transactions and investments - from preparation in the client's home country to support in the target country.
In its consulting work Ecovis concentrates mainly on mid-sized firms. Both nationally and internationally, its one-stop-shop concept ensures all-round support in legal, fiscal, managerial and administrative issues.
The name Ecovis, a combination of the terms economy and vision, expresses both its international character and its focus on the future and growth.