The amendments brought to Ordinance no. 6/2019 (GO6) offers the opportunity of a new beginning for companies affected by the crisis* Under certain conditions, the main debt can be reduced up to 50%
CITR, market leader in insolvency and restructuring in Romania, part of Impetum Group, encourages companies in distress to take advantage of the benefits brought by the new amendments of the GO 6, offering them an opportunity for recovery, by rescheduling their main debts with ANAF, as well as the removal of interest and penalties calculated in relation to them. By means of the amendments to GO6, the Government grants companies the possibility to restructure debts to state budgets due for the period between August and December 2020. The previous form of the ordinance allowed the companies to restructure the budget only until 31 July 2020. Under certain conditions, it is possible to reduce the main debt on 31December 2020 by up to 50%, case in which part of this amount must be paid in advance.
”Now we can count on a more flexible legislative framework, based on prevention and this is a positive signal for the economy. We encourage the companies to take steps towards the process of restructuring based on GO6 as it is an important tool that we used successfully with relevant companies, such as ROMAERO. Thus companies can adopt an early recovery, may benefit from consultancy throughout the procedure, from freedom in negotiating the recovery plan, from support in implementing a business plan that would lead to operational reorganization of the company and, at the same time, from confidentiality throughout the process. This is the first step. Following the same idea of the legislation regarding restructuring, we shall witness transposing the European Directive which must be adopted until July 2021, where CITR was designated as consultant for national implementation”, stated Vasile Godîncă-Herlea, Managing Partner CITR și Head of Business Development Impetum Group.
In order to benefit from this opportunity, companies which have overdue debts as of December 2020 must meet the following criteria: (i) not to be eligible for classical rescheduling comprised in the Fiscal Code (two essential conditions for classical rescheduling are the existence of grantees which at least cover the value of the debt and the payment capacity for the installments during rescheduling period (ii) having their tax return filed on time, (iii) contracting an independent expert, preferably an insolvency practitioner, having experience in similar procedures which can assist throughout the entire process and (iv) to pay the overdue debts accrued during 1 January 2021 and the date of submitting the restructuring plan adopted by GO6. For this reason, CITR experts recommend companies to start the process as fast as possible, to avoid accumulating additional debt to the state budget.
OG 6 uses a mix of tools already established in judicial reorganizations, in which CITR has over 20 years of experience.
The main difficulty in accessing GO6 is covering the amounts due starting from January 2021 and funding the down payment in case of debt reduction. In this case, the best solution is accessing a bank funding, a procedure to which CITR can contribute significantly, having notable experience in the market.
One of the main amendments to the ordinance is the reduction of the percentage of the advance payment that companies must pay to benefit from the opportunities offered by GO 6, which is applied to the amounts to be rescheduled by the plan, not to the entire main debit, as was regulated in the previous version. For example, in case of a main debt of RON 1,000,000, GO 6 provides for the possibility of reducing it to a maximum of RON 500,000, an amount that is paid as follows: a down-payment of RON 75,000 and the difference of RON 425,000 rescheduled over a period of up to 10 years. In the previous form, the RON 500,000 had to be paid as follows: a payment advance of RON 150,000 and RON 350,000 rescheduled through the restructuring plan.
The new provisions also allow companies whose restructuring requests have not been solved by 3 January 2021 to withdraw the initial application, amend their restructuring plan including budget receivables due in August-December 2020 and submit the revised plan.