As known, Law no. 85/2014 is the law that establishes the rules in the field of insolvency prevention and insolvency itself. Among the principles on which the provisions of the insolvency law are based are the following:

• Maximizing the degree of asset realization and debtor debt recovery;

• Providing debtors with a chance for effective business recovery to maintain economic activity and protect jobs;

• Recognition of the existing rights of creditors and respect for the order of priority of claims;

• Favoring negotiation/re-negotiation of debts;

• Administration of insolvency prevention and insolvency procedures by insolvency practitioners and their conduct under the supervision of the court.

According to Article 5(1) point 29 of Law no. 85/2014, insolvency is the state of the debtor’s assets characterized by insufficient available funds to pay certain, liquid, and due debts, which is presumed when the debtor, after 60 days from the due date, has not paid their debt to the creditor.

It can be observed that the insolvency of the debtor is presumed (the presumption is relative) when, after 60 days from the due date, the debtor has not paid the debt.

Specialized literature has shown that “the debtor’s voluntary non-payment of the claim, after a 60-day grace period, leads to the presumption of the debtor’s insolvency.”

Furthermore, according to Article 5(1) point 20 combined with point 72 of Law no. 85/2014, creditors may request the initiation of insolvency proceedings only if, after offsetting mutual debts of any kind, the amount owed to them exceeds the amount of 50,000 lei.

It should be noted that Law no. 85/2014 imposes on the debtor the obligation to apply to the court in whose jurisdiction its headquarters are located with a request to be subject to the provisions of insolvency within a maximum of 30 days from the onset of insolvency.

In the absence of the debtor’s application, one or more creditors, or persons or institutions expressly provided by law, may request the initiation of insolvency proceedings based on a petition lodged with the competent Court. The petition shall specify the amount and basis of the claim, if there is a preferential right established by the debtor or instituted according to the law, if there are precautionary measures on the debtor’s assets, and a possible statement regarding the intention to participate in the debtor’s reorganization, in which case it shall specify, at least in principle, the manner in which it intends to participate in the reorganization.

By the General Procedure Opening Order, the Syndic Judge appoints a Judicial Administrator who shall draw up and present to the Syndic Judge the Report proposing either entry into the simplified procedure or continuation of the observation period and a detailed Report on the causes and circumstances that led to the debtor’s insolvency with mention of any preliminary indications or elements concerning the persons to whom it may be attributable. The term set by the syndic judge for the preparation of the Reports shall not exceed 40 days from the appointment of the judicial administrator.

Furthermore, pursuant to Article 74 of Law no. 85/2014, the Syndic Judge shall instruct the debtor to submit to the case file, within 10 days from the opening of the procedure, the documents and information provided for in Article 67(1) of the Law (latest annual financial statements, complete list of all assets, including all accounts and banks through which the debtor operates its funds, list of names and addresses of creditors, etc.).

Also, by the Opening Order of the procedure, the Syndic Judge:

• shall instruct all banks where the debtor has available accounts not to dispose of them without an order from the Judicial Administrator; (Article 48 of the Law)
• shall request the Judicial Administrator to notify the opening of the procedure to all creditors mentioned in the list submitted by the debtor and to the Trade Registry Office attached to the Braila Tribunal. The notification shall be published, at the expense of the debtor’s assets, in a widely circulated newspaper and in the Insolvency Procedures Bulletin (BPI); (Article 99 of the Law)
• shall set a deadline for the registration of applications for the admission of claims; (Article 100 of the Law)
• shall set a deadline for the verification of claims, the preparation, and publication in the BPI of the preliminary table of claims; (Article 99 of the Law)
• shall set a deadline for the resolution of any objections and for the finalization of the table of claims; (Article 99 of the Law)
• shall instruct the Judicial Administrator to open an account at a banking unit from which the expenses related to the procedure shall be borne; (Article 39 of the Law)
• shall order the communication of the Opening Order of the procedure to the courts in whose jurisdiction the debtor’s headquarters declared at the Trade Registry Office are located and to all banks where the debtor has open accounts. (Article 76 of the Law)

Against the Opening Order of the insolvency procedure, the debtor may lodge an appeal within 7 days from the communication. The appeal shall be lodged with the Court and shall be settled by the Court of Appeal.

Author: Atty. Ionut Sfetcu