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April 17, 2021

There are no state companies that successfully left the insolvency

In the case of Oltchim, according to Economy Minister Varujan Vosganian insolvency should have started in 2009 in order to rescue the company. The PDL motion on taking responsibility for the situation of the plant, rejected by the Chamber of Deputies.

Unfortunately, there are no state companies that were saved after they filed for insolvency, mainly because of authorities’ reluctance to start this procedure, the minister of Economy, Varujan Vosganian said yesterday in the conference ‘From insolvency to restructuring. How one can return to the market using judicial reorganisation,’ organised by Ziarul Financiar.“We are far from understanding the insolvency procedure. Some see it as a sign of failure, others as a modality to sell a company for nothing. Insolvency is a form of protection, not of increasing the vulnerability of a company that has reached hard times. (…) I see no difference between insolvency in the private and public sectors, there are differences when it comes to the success of the procedures,” Vosganian mentioned. He explained that insolvency must be approached without hesitation and assumed without delay, or the chances to benefit from its opportunities will diminish.He added that Oltchim is “the transition’s black box” and, if rescued, it will be a lesson for authorities. “Aversa might be the second example that insolvency can be a solution for the state sector too. Here, too, we have good signals. Using assets that stay inert, not necessarily lands, is an opportunity. We have chances to use assets in order to create industrial parks. Insolvency is a way of recovering and using a patrimony that is largely considered as anachronous,” Vosganian explained. According to the minister, Oltchim should have filed for insolvency as early as mid-2009, when economic indicators significantly deteriorated, as indicated by a note of the previous management team. The Minister of Economy mentioned that insolvency should have started at that very moment, and Oltchim would have been rescued now. He added that, on short term, Oltchim cannot be saved only with external financing, as a new management must be appointed and traders must be convinced to collaborate with the Valcea-based plant. The Ministry of Economy also identified, jointly with the partners of negotiations, guarantees at the pyrolysis unit of Arpechim that could be used for taking a bank loan of EUR 10 M for Oltchim Ramnicu Valcea in view of restarting production, Vosganian announced at the conclusion of a meeting held Tuesday with the prefect of Arges County, Cristian Soare, and the president of the Arges County Council, Constantin Nicolescu. The official mentioned that, when obtaining the financing that will be used strictly for production, authorities will add the matter of appointing a new private manager until March 15 at latest, which will be entirely Romanian.Also yesterday, the plenum of the Chamber of Deputies rejected the simple motion ‘The Ponta government – the factory of jobless,’ initiated by PDL, which demanded that ministers Daniel Chitoiu and Varujan Vosganian should take responsibility for the situation at Oltchim, and urged PM Victor Ponta to apologise to Oltchim employees “for the government’s lies and cynicism” and to rapidly come with a plan of revival/privatisation for the chemical plant, realitatea.net reports.

Banks hid away the problematic files

Banks swept under the carpet the problematic files and granted several loan extensions to their debtors, which resulted in medium-sized and large companies that can no longer resist in the market and risk defaulting on their payments, Arin Stanescu, the president of insolvency experts said in the same event. In his opinion, this is also the reason for the higher number of bankruptcy procedures, over reorganisation ones. “93-94 pc are bankruptcy procedures. In 2011, out of the total number of 26,000 real procedures, there were 1,500 cases of reorganisation,” Stanescu announced. In her turn, Elena Cosma, co-managing partner ZRP Insolvency, said that banks are the main financers of companies under reorganisation and, in few cases, shareholders and even insolvency experts invest sums of money to support the continuing of the activity in the lossmaking companies. On the other hand, the insolvency procedure implies certain costs with preserving and administering the assets of the debtor company. Marius Zidaru, partner in the firm Five Advisory Group, mentioned that there are investment funds interested to buy companies in judicial reorganisation, and this type of investors must be encouraged.

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