The state of alert being declared in Romania and the entering into force of the Law 55/2020 come with new rules on the collective proceedings. The law comes with some derogation from the provisions of the Law 85/2014, in the context of the Covid-19 pandemic that has deeply impaired the business environment.
- Requesting the opening of the collective proceedings by the debtor – a possibility and NOT an obligation
The most important change brought by the Law no. 55/2020 regards the possibility and no longer the obligation for the debtor to formulate in 30 days a request for the opening of a collective proceeding, provided that the conditions under the Law no. 85/2014 for declaring its insolvency are met. This obligation has been temporarily removed by the legislator as the 30-day term starts running since the cessation of the state of alert.
For the record, inobservance of this obligation of declaring one’s insolvency was deemed entailing patrimonial liability on the management bodies of the company and even criminal liability if such a request hadn’t been formulated at the latest in the 6-moth term since such state of insolvency occurred.
Moreover, it is important to note that if the debtor decides to declare its insolvency during the state of alert, this is doable even if budgetary debts account for more than 50% of the total of the debts, because the Law no. 55/2020 brought by a temporary derogation from the article 5, point 72 of the Law no. 85/2014, stating that budgetary debts cannot exceed 50% of the aggregate debts of the debtor.
2. Another condition to be observed by the creditor filing for a collective proceeding request against its debtor
The request for opening collective proceedings against a debtor whose activity has been interrupted during the state of emergency or the state of alert may be lodged, conditional upon producing written evidence that prior negotiation had been conducted for the conclusion of a payment agreement. The legislator provides supplementary protection to the debtors who have been directly impacted upon by the measures undertaken by the authorities in the fight against Covid-19 pandemic.
3. The amount of the debts of a debtor whose activity has been interrupted during the state of emergency or the state of alert grounding the filing of a collective proceeding has been increased from LEI 40,000 to LEI 50,000
The minimum amount of lei 50,000 applies to both the debtor seeking to file for insolvency by also to the creditor requesting such proceedings ‘opening.
This supplementary protection measure is aimed at limiting the number of companies that undergo collective proceedings and support the economic operators who struggle to keep their business afloat in the present context.
Furthermore, during the state of alert, it is no longer possible to start foreclosure of the short-term debts, more than 60-day due and which occurred during the collective proceeding, because the legislator has suspended the enforcement of article 143, paragraph 1 of the final thesis of the Law 85/2014.
- The extension of terms in the procedure for the arrangement with creditors
We remind you that the arrangement with the creditors is an agreement concluded between the debtor and his creditors accounting for 2/3 of the accepted receivables. In such an agreement, the debtor rolls out a rescue a payment plan, which is to be drawn up in compliance with the negotiations with the creditors. The plan approved by the creditors must be confirmed also by the Court.
A. Extension of the term for negotiation with 60 more days
The debtors who are under a procedure of arrangement with the creditors benefit from a 60-day supplementary term to negotiate and draw up the offer for such agreement, therefore, in whole, a 120-day term.
B. 2-month supplementary extension of the payment deadlines for receivables covered by the arrangement
The debtors who are under a procedure of arrangement with the creditors benefit from a 2-month supplementary term to pay the receivables covered by the rescue plan assessed by the Court.
For the record, the term provided by the Law no. 85/2014 is of 24 months starting with the date of confirmation of the plan by the Court, with the possibility of another 12-month extension. Therefore, the debtor under such arrangement with the creditors can benefit from a maximum 38-month term for the payment of the receivables covered by the rescue plan.
- Extension of the deadlines for the debtors seeking to reorganize their activity under collective proceeding
The legislator has also modified the provisions of the Law no. 85/2014 on the stage of reorganization of the activity of the debtors in progress at the date of entering into force of the Law no. 55/2020, in a bid to support the economic operators impaired by the Covid-19 pandemic.
A. The term for submission of the reorganization plan extended by 3 months
Pursuant to the Law 85/2014, the observation period is of maximum 12 months after the opening of the collective proceeding. In the light of the new modifications, the maximum duration of the observation period is increased to 15 months.
If at the date of entering into force of the Law no. 55/2020, the term for submission of the rescue plan has started running / is running, the debtor benefits from a supplementary 3-month term to roll out a reorganization plan. For the record, the former delay to roll out a reorganization plan was of 30 days since the date of publication of the final receivable table.
B. The possibility to adjust an already filed reorganization plan within the 3-month terms since the entry into force of the Law no. 55/2020
In order to benefit from the 3-month term to adjust an already filed plan, the following conditions must be met:
- The Court hasn’t ascertained it
- The rescue perspectives (meaning the possibilities and the specific of the activity of the debtor, the available financial resources, etc.) have been impaired by the effects of the Covid-19 pandemic ;
- The persons seeking to modify the reorganization plan have announced such intention within the 15-day term since the entering into force of the Law no. 55/2020.
C.The reorganization plan can be carried out during up to 5 years
The debtor who is under a judiciary procedure and whose activity has been completely / partially interrupted, due to the measures taken by the authorities as part of the fight against the Covid-19 pandemic, can benefit from an extension of the reorganization plan from 4 to 5 years.
Furthermore, the debtor who is under a judicial reorganization procedure at the date of entering into force of the Law no. 55/2020 can request the syndic judge a 2-month supplementary extension of the reorganization plan.
In the same way, the debtor under a judicial procedure and whose activity has been completely interrupted by the measures taken by the authorities in the fight against the Covid-19 pandemic, can also request the syndic judge a 2-month suspension of the execution of the reorganization plan, during the 30-day term since the entering into force of the Law no. 55/2020.
To conclude with, we can say that the legislator has adopted supplementary protection measures for the debtors, measures that are more fit to the present economic reality and that could help the debtors thrive during such harsh times.
GRUIA DUFAUT LAW OFFICE
Attorneys at law (Paris & Bucharest)