Insolvency Code, adopted by the Chamber of Deputies

PNL and PDL announced that they will separately challenge the Code at the Constitutional Court.

The draft law on the procedures of insolvency and of preventing insolvency was adopted yesterday by the plenum of the Chamber of Deputies with 212 votes against 111, and 8 abstentions.
Minister of Justice Robert Cazanciuc said in the plenum of the Chamber of Deputies that the draft law on insolvency put on debate by the Parliament is an important step forward, as it comes in support of the business environment, giving it instrument more efficient in redeeming claims, proposes solutions for preventing abuse in procedure by the debtor or creditor, proposes measures for a lawsuit concluded within a reasonable time interval. “(…) The main targets set in drafting the Insolvency Code – improving the legal framework by using the judiciary practice of compared law and the proposals received by the Ministry of Justice from those active in this field and from the business environment. Completing the legal framework with regulations in fields that have not been approached so far, like the insolvency of groups of companies was circumscribed to the same objective of improving the legally applicable provisions. Another objective was to provide a better balance of interests in concourse, in the sense of consolidating the protection of the creditor. The latest improvements brought to the draft law in the Chamber of Deputies consolidate the position of the financer that contributes to supporting the business of the debtor and increasing the chances of reorganisation. Another goal was to increase the efficiency of the insolvency procedure,” Cazanciuc said during the debates on the project.
According to the motivation of the draft act, it proposes an integrating vision that includes the general legal agenda in only one legal corpus, applicable to all economic entities, the special legislation, the incidence of credit and insurance/reinsurance institutions, the regulating of the insolvency of groups of companies, the regulating of crossborder insolvency. The new law also regulates the instruments of preventing insolvency.
In his turn, PM Ponta mentioned that the new Law of Insolvency must allow companies to restructure themselves and pay their debts in order to re-launch their activity, while also countering “the smart guys who understood that you better buy televisions and politicians than pay taxes.”
PNL and PDL protested against the adoption, announcing that they will separately challenge the Code at the Constitutional Court. The opposition accuses the haste of Power deputies who want to pass the law without debating it, although it has approximately 300 pages. As debates were nearing the end, the group of PDL withdrew from the room, complaining that the majority forces the adoption of the law. The vice-president of the PNL group, Alina Gorghiu requested the draft to be returned to committees, because it makes no reference to the insolvency of natural persons.
“I believe we are making a mistake by forcing (the adoption of) a very important law. I would not mix the insolvency of legal entities with that of natural persons. Either by code or law, we can settle these issues. It is a law. If we draft another one and unite them, it is a code. This raises several problems. (…) There are things related to the functioning of this law. If you do not postpone the debate, PDL will leave the room,” PDL deputy Cezar Preda stated.
Before the vote, PM Victor Ponta voiced his hope that the draft law will pass in the Lower House, as it is the most important topic of the agenda. On December 2, 2013 the government sent the new Insolvency Code to the Parliament, in emergency procedure, under the form of a draft law, after the Constitutional Court of Romania decided that the emergency ordinance on the Insolvency Code is unconstitutional and admitted the complaint filed by the Ombudsman. The draft law was rejected in the Senate on February 25, 2014.

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