Just this past October, Government Emergency Ordinance GEO 8/2018 was published, which set out certain new amendments to Romania’s insolvency regime.
The ordinance amends: (i) Law no. 85/2014, regarding Romania’s insolvency law itself; (ii) ordinance no. 2/2000 regarding judicial application; (iii) ordinance no. 90/2017 regarding fiscal budgetary matters; and (iv) ordinance no. 86/2006 regarding the insolvency practitioner profession.
Essentially, GEO 88/2018 was adopted in order to improve mechanisms for the recover of state receivables from insolvent companies, and to take measures to avoid abusive initiation of insolvency procedures by certain debtors, which use insolvency mechanisms in order to avoid paying state receivables.
Threshold for the Initiation of Insolvency
GEO 88/2018 introduces a baseline of RON 40,000 (approx. EUR 8,500) of outstanding debt owed to creditors in order to allow the initiation of an insolvency proceeding. In addition, the value of debt to the state must be less than 50% of total debts outstanding.
State Budget Claims
State budgetary claims will be registered in the table of creditors regardless of whether an acknowledged tax decision is issued after the initiation of an insolvency procedure. Note that registration requires that the taxes owing be due to activity occurring prior to the initiation of insolvency.
It is now prohibited to appoint a person or an entity which is also a creditor of the insolvent company as the special administrator.
The judicial receiver must henceforth provide monthly reports regarding: (i) compliance with tax duties; (ii) the obtaining or updating of necessary permits for the insolvent company; (iii) decisions / other deeds issued by public authorities; and (iv) the receiver’s monthly fee.
Additionally, the receiver will no longer be allowed to appoint third party specialists directly or indirectly associated with a director of the insolvent company, the liquidator, the insolvent company or any of its creditors.
Payment of Receivables
There is now a 10 day deadline for the judicial receiver to review receivable payment requests and rule accordingly. Failure to resolve within 60 days gives the creditor the right to request the initiation of bankruptcy proceedings.
State receivables can be converted into shares, but this requires prior consent of the state itself. The state creditor can approve to a reduction of its unsecured receivables if this is deemed as the best way for efficient recovery.
Liability for Insolvent Status
GEO 88/2018 now explicitly provides that the judicial receiver or the liquidator has the obligation to initiate a claim for patrimonial liability against those persons identified as being responsible for the insolvency.
This liability claim must be initiated within 3 years from the date of initiation of insolvency.