What is the insolvency?

The insolvency of a company is characterized by its payment incapacity or insolvency following the accumulation of some debts towards different creditors. After opening the procedure, other penalties and accessories cannot be applied.

There are several essential elements for the request to be approved by the court, and for insolvency we deal with the law court having jurisdiction on the debtor company, and therefore:

The receivables should be:

  • certain – it should result from documents, accounting registers etc., recognized and approved by debtor;
  • liquid – the receivables, or in other words, the amount should be established or at least possible to be established based on documents;
  • outstanding – the receivables should be already due, and therefore possible to be claimed at anytime by the creditor.

What is insolvency upon the debtor’s request:

  • the debtor or the company in difficulty may claim the law court to enter in the insolvency procedure. The claim should be supported by documents certifying the amount of debts and they should exceed the threshold provided by law, meaning 40.000 lei, it should be declared that the company has not been subjected to the procedure in the last 5 bears before submitting the request and that the company’s administrator has not been finally convicted for the offences provided by Law no. 21/2006 (offences provided to art. 67 letter J of Law 85/2014).
  • Also, there shall be attached to the request the accounting documents for the last three years (balance sheets, accounts), a list of creditors and their addresses, list of the company’s assets and bank accounts, according to art. 67 of Law 85/2014.
  • The request shall be judged immediately, in term of 5 days after its submission, without summoning the parties.

What is insolvency upon the creditor’s request is insolvency:

  • The creditor holding a receivable right on another company may claim in court the opening of the insolvency procedure for the latter;
  • In case there are several creditors that submit the request for opening the insolvency procedure for the same company, these shall be attached to the file concluded when it was introduced the first request (oldest request).

Opening the insolvency procedure

After opening the procedure, the assigned legal administrator shall notify by mail all creditors, depending on the list submitted by the administrator of the debtor company and shall publish in the Bulletin of the Insolvency Procedures such notification. This notification shall include important information, such as the due date for submitting the receivables request on the creditor’s assets.

How should one proceed if the request for approving the receivable has not been submitted within the term specified by order?

  • In such case, there are slim chances to register within the statement of affairs, the legal administrator deciding on it, and in case the receivable is not approved, the only option is to appeal the table, and the contestation can be submitted in term of 5 days after the presentation of the preliminary table in the Bulletin of Insolvency Procedures. The only reason that you can invoke is that you have not been notified by the legal administrator and to request the submission on term, but in case the notification has been published in the Bulletin of Insolvency Procedures, in time, there are no chances of success because Law no. 85/2014 provides for all the procedure documents to be presented by this Bulletin.

Reorganization plan of the company

In case the company declared its intention of reorganization, after entering in insolvency, through the special administrator, after finishing the preliminary table and solving all the challenges, it shall submit a reorganization plan after the submission date of the final table, in a term of maximum 30 days, plan that shall be subjected to the vote of creditors’ meeting, convoked by the legal administrator.

What happens during the legal reorganization term?

  • The company shall continue its activity, the bankruptcy judge shall establish the trial terms, usually to 6 months, in order to verify the activity during this period (if there were made the payments to the creditors, according to the reorganization plan).
  • If the payments are not up to date, any creditor may claim the company’s bankruptcy.

How is it opened the bankruptcy?

  • If the company does not manage to pay its debts to the creditors, according to the approved reorganization plan, the bankruptcy judge shall rule the bankruptcy.

Effects of the bankruptcy:

  • The administration right is withdrawn.
  • It is ruled the company’s dissolution.
  • The goods from the company’s assets shall be liquidated and the amounts obtained from selling them shall be distributed during the procedure, according to the legal provisions.

Exiting the insolvency

  • If the reorganization plan is successful and all the receivables are paid up to date, the bankruptcy judge shall rule the closure of the bankruptcy procedure.

The insolvency procedure is opened at the debtor’s request (the company with problems), or upon one creditor’s request (of a company whom the company owes a certain amount of money).