Several questions immediately come to mind when your client cannot pay. One question in regard to Romanian debtors is what happens with the debtor’s ongoing contracts when the insolvency starts?
One of the main principles governing Romanian insolvency proceedings is that steps should be taken to re-organise the debtor affairs before the step of bankruptcy.
Many questions arise when a contractual partner enters into insolvency. One question is what happens with the debtor's ongoing contracts when the insolvency starts? Are they maintained or terminated?
One of the main principles governing insolvency proceedings states that the debtor's reorganisation should be sought before bankruptcy. To this end, the Romanian Insolvency Law (RIL) provides a series articles supporting the debtor's potential reorganisation.
Pursuant to the issuing by the Romanian government of Government emergency ordinance no. 91/2013 on the Insolvency Code, Ordinance that has been declared unconstitutional by the Romanian Constitutional Court in October 2013, Romanian Parliament adopted a new Insolvency Law (“New Law”), maintaining some of the valuable provisions of the unconstitutional Ordinance.
Following a lengthy process which started in 2012 aiming to reform the Romanian insolvency framework as part of a wider judicial reformation program, the New Insolvency Law (Law no. 85/2014 regarding the prevention of insolvency and the insolvency proceedings) entered into force on 28 July 2014.
In 2014, Romania adopted a new insolvency law, which brings together under one piece of legislation all the procedures applicable to companies, groups of companies, credit institutions, insurance and reinsurance companies, as well as insolvency prevention and cross-border insolvency proceedings. Despite repeated legislative attempts, to date Romania does not have a legal framework for the insolvency of natural persons.
Since the enactment of the new insolvency law in 2006, its proceedings have been amended many times to improve and simplify bankruptcy. In the past few years, the economic downturn has caused more and more companies to request court protection with the hope of undergoing reorganisation, realising that insolvency need not be the death of the company but, rather, a second chance.
The New Civil Procedure Code (NCPC) was postponed several times before eventually coming into force on 15 February 2013. The legislators anticipate that the new law will speed up proceedings and offer a greater level of protection to civil rights.
The New Civil Procedure Code (NCPC) came into force on 15 February 2013 and is applicable to all enforcement proceedings that commenced after this date.
Creditors may begin forced execution if they have an enforceable title. During such proceedings several incidents may occur, which may result in either the impossibility or the delay to the full protection of the creditor’s rights.
Statute of limitations
The New Civil Procedure Code (NCPC) came into force on 15 February 2013 and is applicable to all enforcement proceedings that commenced after this date.
The Romanian Government recently adopted a Government Emergency Ordinance regulating the insolvency of the countrys territorial administrative units (the 'Ordinance').1 The measure, which was supposed to have been enacted in 2006, as contemplated under the local public administration law, was prompted mainly by the staggering amount of debt amassed by many territorial administrative units, as well as Romanias commitments to its international creditors, including the International Monetary Fund.