Banks, leasing companies or the National Agency for Tax Administration (ANAF) are often creditors of the Romanian insolvent companies. In some cases, ANAF, as well as other creditors act abusively. That’s why it is recommended to insolvent company to hire a lawyer specialized in insolvency and restructuring, which can advise them to prevent abuses, says Radu Pavel, Managing Partner of Pavel, Margarit & Associates Romanian Law Firm.
“Many insolvent companies face abusive situations when dealing with creditors, because creditors have unsubstantiated claims. We had situations when creditors have asked for late penalties, even if the debt has already been paid. Many times, these debts were enrolled at the table of creditors,” says Radu Pavel, lawyer specialized in insolvency and restructuring.
Here are some examples of abusive practices that lawyer Radu Pavel has experienced over the 14 years of practice in Restructuring and insolvency.
Credit institutions abusive practices
There are situations when credit institutions (banks or leasing companies), have tried to increase their liabilities, says lawyer Radu Pavel.
Often there have been situations when the banking institutions have included accessories and penalties in a debt which had already been paid and tried to register it at the tables of creditors. At the same time, there were situations when letters of guarantee were executed during the insolvency. However, when the company is in insolvency this is no longer possible.
Also, there are situations when so-called creditors request the recovery of the debt under a guarantee contract. “Basically, these are companies that offer a guarantee for some creditors of the insolvent company. These companies that offered the guarantees request the registration to the table of receivables with the guarantee value, although this guarantee has not been executed”, says Managing Partner Radu Pavel.
Also, leasing companies act sometimes abusively. “When the leasing company finds out that the debtor has gone into insolvency, it sends a notice of cancelling the contract, requesting full payment of the debt, although it is not allowed to do so, because the contracts remain in force during the insolvency period or they are maintained by the insolvency practitioners,” says lawyer Radu Pavel.
ANAF abusive practices
Not only the creditors, but also the National Agency for Fiscal Administration can act abusively.
For example, there have been situations when ANAF has registered its claims resulted from tax inspection at table of creditors. These fiscal inspections are carried out after the opening of the insolvency procedure. The company notifies ANAF the opening of the insolvency procedure, and the Agency carries out an inspection. As part of the inspection, the Agency may consider certain expenses as non-deductible. In other situations, the insolvent company is a VAT payer and deducts this tax. When receiving a VAT refund request, ANAF, instead of ordering the VAT refund, may consider those expenses as non-deductible. As a consequence, the Agency’s claims at the tables of creditors increase. This is an abusive practice,” explains lawyer Radu Pavel.
With over 14 years of experience, the lawyers specialized in restructuring and insolvency from Pavel, Margarit & Associates Romanian Law Firm advised in many cases of creditor’s abuse in insolvency procedures cases and successfully rejected their unsubstantiated claims. Due to best results obtained for its clients, the Romanian law firm ranked in the last years on the second place in Romania in Restructuring and insolvency practice area in Legal 500 tables, the most prestigious law guide in the world.” Creditors abuses can take various forms. At the same time, the insolvency procedure is marked by strict deadlines, so in order to have a successful recovery it is advisable to hire a specialist”, says Radu Pavel, Managing Partner of Pavel, Margarit & Associates Romanian Law Firm.