On 26 August 2015, the Board of the Romanian Financial Supervisory Authority (“FSA”) analysed the status of the Romanian insurance undertaking ASTRA SA, considering the report of the special administrator, KPMG Advisory. 

According to the FSA, on 30 June 2015, ASTRA SA had: (i) a negative available solvency margin of approximately RON 871 million (approximately EUR 197 million), (ii) a liquidity ratio of 0.03, and (iii) a capital shortage of approximately RON 968 million (approximately EUR 220 million). 

Law no. 151 on insolvency procedures for individuals[1] (the “Law”) is expected to enter into force on 26 December 2015. The Law was published on 18 June 2015, but its entry into force was deferred by six months in order to allow the establishment of a new public body to manage insolvency claims, as well as the enactment by the Government of the regulations for the implementation of the Law.

On January 25, 2016, the Romanian court handling the bankruptcy proceeding of Astra SA extended the deadline to file court claims against Astra SA to 17 February 2016. The initial deadline for filing was 18 January 2016. Creditors of Astra SA may wish to avail themselves of this extended deadline to file such claims in order to recover some or part of the amounts owed to them by Astra SA in the bankruptcy/liquidation proceedings.

On 27 July 2016, the Board of the Romanian Financial Supervisory Authority (“FSA”) analysed the status of the Romanian insurance undertaking Carpatica Asig SA, considering several audit and assessment reports. The outcome of the FSA analysis was the commencement of the bankruptcy procedures against Carpatica Asig SA.

On 27 December 2016, the Board of the Romanian Financial Supervisory Authority (“FSA”) analysed the status of the insurance and reinsurance undertaking LIG Insurance SA, ultimately, commencing bankruptcy procedures against LIG Insurance SA and withdrawing its license to carry on insurance and reinsurance activity (FSA Decision 2347/2016).

According to the FSA, on 31 October 2016 the company had: (i) negative own capital of RON 56.2 million; and (ii) a liquidity ratio of 0.44, resulting in concern over its capacity to cover its due obligations using own funds.

From an economic perspective, especially in the current business environment, contractual freedom is the best legal method to satisfy the legitimate interests of individuals and to ensure the general benefit and, consequently, social progress. From this point of view, in any activity, every business is seeking to make a profit. Achieving this depends on a series of determinant factors as well as a certain number of risks which any business should assume when implementing its objectives.

An absolute novelty under the Romanian legislation, Law no. 151/2015 on insolvency of natural persons (“Personal Insolvency Law“) was adopted by the Romanian Parliament back in June 2015. Due to certain administrative reasons (e.g. need of regional administrative bodies specialized on the personal insolvency of natural persons, lack of trained personnel and financial resources), the entry into force of the Personal Insolvency Law has already been postponed three times until now.

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.

A moratorium on bankruptcy filings and certain security enforcement has been imposed by the Russian government for at least six months with respect to many categories of companies. During this period, the ability of creditors to enforce their existing rights will be restricted significantly. It is likely that the negotiating balance will swing in debtors’ favor, but the moratorium will place all business and survival decisions of those protected companies under increased scrutiny and at risk of being challenged or found void in certain cases.

Legal Background

The Russian Federation continues to take measures aimed at reducing the negative impact of the coronavirus (COVID-19) outbreak on businesses. On 1 April 2020, Article 9.1 (“Moratorium on Initiation of Bankruptcy Proceedings”) was incorporated into the Federal Law “On Insolvency (Bankruptcy)” (the “Bankruptcy Law”), and on 3 April 2020 the Government of the Russian Federation introduced a moratorium on the initiation of bankruptcy proceedings against certain categories of debtors on the basis of the aforementioned Article.