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November 25, 2020

Executive Decree on Insolvency Code, unconstitutional

The Constitutional Court argues that the government may not pass acts that affect the regime of the fundamental state institutions.
The Constitutional Court of Romania (CCR) ruled that the Executive Decree which enforced the Insolvency Code is unconstitutional and admitted the appeal filed by the Ombudsman. CCR decided that art. 115 paras. 4 and 6 of the Constitution were infringed, as there is no justification for adopting an Emergency Ordinance (OU) and that the government may not pass ordinances that affect the regime of the fundamental state institutions, Agerpres reports. Art. 115 para. 4 provides that “the government may adopt executive decrees only in extraordinary situations whose regulation cannot be delayed and has the obligation to justify the character of emergency within the document,” while para. 6 stipulates that “executive decrees may not be adopted with regard to constitutional laws, they may not affect the regime of fundamental state institutions, the rights, freedoms and duties provided by the Constitution, the electoral rights, and may not target measures of forced transfer of goods into public property.”
Ombudsman Anastasiu Crisu challenged the decree on the Insolvency Code on October 9 at the Constitutional Court, invoking the nonconformity of some legal provision of the respective document to article 1 paragraph 5 and article 15 paragraph 2 of the Constitution. The incriminated articles refer to the suspension of the audiovisual license after the opening of the insolvency procedure, if the debtor’s activity is under the incidence of the provisions of the Law of Audiovisual and, respectively, the enforcement of the ordinance in the case of insolvency prevention procedures or of insolvency procedures that were already initiated when the regulation came into force. Initially, the Insolvency Code was adopted by the government as an emergency ordinance, instead of a draft law, but later it was placed under public debate by the Ministry of Justice, under the form of a draft law. PM Ponta explains that the government has trouble collecting money to the budget, mainly because of the ANAF reorganisation, and hopes that the new Insolvency Code will counter the tax evasion caused these years by companies that went insolvent only in order to avoid paying taxes to the budget.

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