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.
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.
As of June 2014, the new Insolvency Law no. 85/2014 has modified the regime of financial leasing agreements in insolvency proceedings.
All in all, there are both good and bad news for leasing companies. Good news are mainly related to leasing companies’ right to terminate leasing agreements even after commencement of the insolvency proceedings, whilst bad news mainly concern newly imposed limitations on value of receivables that can be registered in insolvency by a leasing company.
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.