How do the changes brought by law 85/2014 on insolvency affect entrepreneurs?
The new law on insolvency – law 85/2014, came into force on the 28th of June 2014 and has brought forth important changes to the insolvency proceedings. This law is the successor of the Government Emergency Ordinance number 9/2013, retaking most of its regulations, ordinance that was found unconstitutional by the Constitutional Court of Romania.
Why are the changes brought by the new law of insolvency important?
What are the most important changes brought to the insolvency proceedings?
How do these changes affect creditors and debtors?
The changes suffered by the insolvency proceedings are likely to provide the fluency progress of the insolvency procedure. These changes target both the means of starting the procedure and the vote in the General Assembly of Creditors.
What must we know in order to begin the insolvency proceedings?
Firstly, regarding the competent court to resolve the request for opening insolvency proceedings, unlike the old law, where jurisdiction lies with the court in whose district the debtor’s headquarters is, the new law brings an addition. According to article 41 paragraph 1 stipulating that the jurisdiction to resolve a request for opening the insolvency proceedings belongs to the court in whose district the debtor has had its headquarters for at least six months before the request for opening insolvency proceedings was filed.
What is the minimum debt and how long must a creditor wait in order to request the beginning of the insolvency procedure?
A new important change is setting the minimum debt for beginning the insolvency procedure both for debtor and creditor at 40.000 lei, according to article 5 section 72.
Another interesting change is reducing the period of time for which the debt has to be due in order for the creditors to request the opening of insolvency proceedings. If in the old law the period was 90 days, in the new law, according to article 5 section 20, the period of the debt to is 60 days.
What other new procedural information does the new law of insolvency contain?
By the entering into force of the new law, procedural changes were made regarding filing the request for opening the insolvency.
According to article 66 paragraph 6 at the time of submitting the request for opening the insolvency proceedings, the registry service will check by default the existence of other pending requests for initiating the procedure, previously made by creditors. In case there are registered requests from creditors, the debtor’s request is settled and if it is admitted the judge will order for all the creditor’s requests to be solved in the same file and these will be considered statements of debts.
If, after filing the application by the debtor, but before solving it, demands of initiation the insolvency proceedings are formulated by the creditors, these will be registered directly to the request of the debtor.
Furthermore, according to article 71 paragraph 2 creditors can formulate appeals to the insolvency proceedings within 10 days of receiving notification of the opening of the insolvency.
How does the new insolvency law affect the judiciary administrators?
The new law introduces new requirements for the judiciary administrators and the bankruptcy judge. In accordance with article 59 paragraph 1 and 3 the judiciary administrator will submit monthly reports of the situation and how he has been performing. Every 120 days, the bankruptcy judge will analyze and will give rulings regarding the stage of the proceedings. Also, if the old law does not fix a period for inventorying the debtor’s assets, through article 101 of Law 85/2014 is stated that the judiciary administrator is required to inventory the debtor’s assets within a fixed period of 60 days that begins from the date of the opening of the insolvency proceedings.
The canceling of fraudulent documents regulated in art. 80 of the old law suffered changes regarding time periods. According to article 117, the judiciary administrator or judiciary liquidator may petition the bankruptcy judge for cancellation of fraudulent documents or operations of the debtor at the expense of creditors’ rights, in the 2 years prior to initiation of the insolvency proceedings.
What changes has the new law on insolvency brought to the regulations regarding the General Assembly of Creditors?
According to the regulations of article 48 paragraph 1, the new law provides the possibility for creditors to know when the General Assembly of Creditors will take place. The General Assembly of Creditors will be able to validly meet only if, from the publication of the summoning in the BPI (Insolvency Procedure Bureau) have passed at least five days, and is also compulsory to mention in its content the agenda of the Assembly.
Moreover, unlike the law 85/2006, which stipulates that the creditors must assemble once a month, through article 47 paragraph 2 of the new law that regulates insolvency, the judiciary administrator or the judiciary liquidator may summon all known creditors in cases expressly mentioned by this law and whenever necessary.
Article 49 paragraph 3 regulates that, after a decision is taken in the General Assembly of Creditors, and by final judgment, the vote was found tainted by the insertion or deletion of a claim for which the holder requested the enrollment in the statement of affairs and if so the corrupted vote could had led to the taking of a different decision, the General Assembly of Creditors can be summoned again with the same agenda. Through such measures, the new law solves frequent problems enlightened by general practice, generated by decisions of the General Assembly of Creditors taken in terms of false majority.
Initiation of bankruptcy – is it affected by the new law of insolvency?
As for the initiation of bankruptcy proceedings, Article 75 paragraph 4 regulates that the holder of a current debt, that is certain, liquid and due and was recognized by the judiciary administrator or by the bankruptcy judge and whose amount exceeds the minimum debt may require during the observation period, the initiation of the debtor’s bankruptcy if these claims are not paid within 60 days from the date the action was taken by the judicial administrator or the court’s decision.