The Romanian government has adopted, by means of Government emergency ordinance no. 91, the Insolvency Code. The Code gathers and amends all pre-insolvency and insolvency provisions in Romanian legislation relating to companies, groups of companies, credit institutions, insurance and reinsurance companies, as well as cross-border insolvency proceedings. It will enter into force on October 25, 2013 and will also apply to already ongoing insolvency proceedings.
The Code provides a new requirement for reorganization plans to be approved, namely the approval of creditors, who hold at least 50% of the total receivables value. Furthermore, the initial duration of the reorganization plan has been reduced from 3 years to one year, whilst the duration of the sole extension allowed for the reorganization plan has been reduced from 18 months to one year.
According to previous provisions, debtors were able to file insolvency petitions irrespective of the amount they owed to creditors. The Insolvency Code now obliges a debtor filing an insolvency petition to owe at least 40,000 RON to their creditors.
The Code introduces the possibility for creditors, who filed an insolvency petition against a debtor, to seek interim measures, even before the insolvency petition is heard, in order to prevent the sale of assets by that debtor.
While any enforcement actions against the debtor will still be stayed as an effect of the insolvency proceedings, the Code contains new provisions allowing creditors to seek enforcement of their receivables arising during the insolvency proceedings and which have been due for more than 90 days.
The process of approval of this Code is quite controversial, as the Government opted to adopt the Code directly, through the emergency procedure, rather than allowing Parliament to pass the Code. Also, the severe reduction of the maximum period allowed for a reorganization plan, as well as the possibility to enforce the assets of the debtor for new receivables (applicable mainly to the new claims of the fiscal authorities) caused various practitioners to argue that this Insolvency Code is rather a Bankruptcy Code.