ROMANIA
As at 8 March 2018
By Radu Lotrean
CITR Group, Bucharest
* Please see the table at the end of the page for the main features of each proceeding mentionned in the table below:
| Proceedings | Elements of the Directive already included into the national legislation |
| Judicial reorganization, Bankruptcy, Simplified Bankruptcy, The Arrangement | Article 6 & 7 - According to the Insolvency Law at the date of the opening of the procedure any individual enforcement action of the creditors is suspended until the ruling regarding the opening is final, moment to which any action should cease. |
| Judicial reorganization (observation period included) | Article 6 & 7 – Regarding all the ongoing contracts, according to the Insolvency Law no 85/2014, the opening of the General Insolvency Procedure does not affect the ongoing contracts with suppliers and other creditors provided that it fulfils his obligations under such contracts. Explanation: The opening of the insolvency procedure is the moment when the observation period starts. The observation period ends either with an approved reorganization plan or with the opening of the bankruptcy procedure if the plan is not approved or submitted. In this regard any ongoing contract at the moment of the opening of the general insolvency procedure, is considered to be continued by the debtor and the other party cannot terminate the contract for this reason. |
| Judicial reorganization | Article 8 – According to the Romanian insolvency Law, in order to be valid, the reorganization plan should provide some minimum mandatory information regarding how the debtor will restructure/reorganize the activity and how will pay the debts. Explanation: In order a plan to be confirmed by the syndic judge, it has to provide some minimum mandatory information. The Law provides which information is mandatory. The debtors do not have on-line models/templates but the law provides the types of actions a plan can provide in order for the debtor to reorganize. But, the reorganization plans are opened to public so interested debtors can adapt the ones they find online. |
| Judicial reorganization, Bankruptcy | Article 9 – According to the Romanian Insolvency Law in the general insolvency proceedings there are 5 creditors classes:
The classes are important when voting the proposed reorganization plan because the plan is voted by class, every class having one vote in the creditors meeting. Also, the classes provide the payment priority both in reorganization and bankruptcy. |
| Judicial reorganization, The Arrangement | Article 10 – According to the Romanian Law a reorganization plan submitted within the general insolvency procedure, in order to be to be binding has to be confirmed by the syndic judge and the law provides the conditions for such confirmation. If the plan is not confirmed the bankruptcy procedure is opened. According to the Romanian law a restructuring plan submitted within the Arrangement procedure in order to be to be binding has to be confirmed by a court and the law provides the conditions for such confirmation. |
| Judicial reorganization | Article 11 - The Romanian Insolvency Law sets out the conditions to be fulfilled in order for a reorganization plan to be approved and confirmed even though is not supported by all the classes. |
| Judicial reorganization, Bankruptcy, Simplified Bankruptcy | Article 13 provides rules on valuation, on when and how it must be determined in order to ensure fair protection for dissenting parties. The Romanian Insolvency law provides rules regarding the valuation on how the valuator is selected, publicity of the valuation results and how can the parties challenge the results. |
| Judicial reorganization | Article 14 - According to the Romanian Insolvency Law in order to be valid a reorganization plan has to provide which are the disadvantaged classes of creditors and which is the treatment of this classes. |
| Judicial reorganization, bankruptcy | Article 15 The Romanian Insolvency Law provides rules on appeals as safeguards for protecting the parties' legitimate interests, while also ensuring that such safeguards do not delay confirmation or implementation of restructuring plans. Unfortunately, in practice the appeals can delay very much very much the confirmation or the implementation of the reorganization plan. |
| Judicial reorganization (including the observation period) | Article 16 and 17 provide minimum protection for new financing necessary to implement a restructuring plan, for interim financing incurred to ensure a business's continuity during restructuring negotiations, and for other transactions concluded in close connection with a restructuring plan. The insolvency law provides a priority on restitution to the creditors who provide new financing in the observation period and/or in the reorganization period. |
| Proceedings | |
| `Concordat preventiv` (the arrangement) – is a Preventive Procedure | Approval by the court of a recovery plan previously negotiated and approved by at least 75% of the creditors (by the amount of the claim) |
| `Mandat ad-hoc` (ad hoc mandate) - is a preventive procedure | Appointment by the court of an insolvency practitioner who, within 90 days of appointment, will have to sign deals with one or more creditors, in order to save de company, the jobs and to pay the debts according to the new agreements (the insolvency practitioner appointed can propose total/partial debt remissions, debt rescheduling, staff reduction, contract negotiation, etc.) |
| Judicial reorganization (`Reorganizare judiciara`) – a General Insolvency Procedure followed by the approval of a reorganization plan and confirmation of the syndic judge. | Approval by the creditors and confirmation by the syndic judge a reorganization plan which should provide a repayment plan (max 4 years), after an observation period. The plan can provide: - sale of a part of the business activity or the whole business as a going concern - debt to equity swaps - management changes - mergers - debt reschedules - give ins to pay - shareholder changes - modification of the articles of incorporation etc. |
| `Faliment`(liquidation/bankruptcy) – a General Insolvency Procedure opened after the observation period if no reorganization plan is submitted or voted or if the approved reorganization plan fails. `Faliment simplificat` (simplified bankruptcy/liquidation) – a Simplified Insolvency Procedure |
- closure for payments of debts - sale of a part of the business activity or the whole business as a going concern - Piecemeal liquidation * The difference between the two procedures is the moment of the opening |