ONV LAW: Solutions for businesses that face financial difficulties or even insolvency

Deniza Cristian 22/02/2022 | 15:10

As most Romanian companies face financial difficulties due to the increase of energy and gas bills, the latest news announced by the authorities regarding the amendment of the Insolvency Law 85/2014 will lead to the recovery of the Romanian business environment, an ONV LAW analysis highlights. 

 

Specifically, the new changes provide early access to effective national restructuring mechanisms to prevent insolvency and bring a company back into the business circuit. 

Also, a higher degree of debt recovery will be generated, the business will be able to remain in operation, and the company in difficulty will be able to keep its right of administration throughout the insolvency prevention process. 

These are essential measures, especially since the entrepreneurs` forecasts are not optimistic: 7 out of 10 plan to reduce or postpone future investments. Moreover, almost 35% will reduce the number of employees in the near future, and 8% will put the lock on the door in the next period, according to the latest statistics of the National Council of Small and Medium Private Enterprises. 

Entrepreneurs at risk of insolvency have 7 steps to follow:  

  • According to the new law amendments, the company in difficulty will have the possibility to propose a restructuring agreement, which will be drawn up by the restructuring administrator or directly by the company, with its assistance; 
  • The final form of the restructuring agreement will be communicated to the creditors who have to recover sums of money from the company in difficulty; 
  • Subsequently, the administrator of the restructuring plan will be able to negotiate with the creditors regarding the payment of the outstanding amounts; 
  • The restructuring agreement is voted only by the creditors whose debts are staggered or reduced by this plan; 
  • After the plan is approved by the creditors, the company will be able to apply to the court for confirmation of the restructuring agreement; 
  • The request for solving the restructuring agreement will have to be solved by the court, within maximum 10 days from the date of its registration. 

 

“The restructuring agreement is binding on all creditors of a company, even if they voted against or did not vote at all. It should be noted that, for companies which in the previous year achieved a net turnover of up to EUR 0.5 million, in RON equivalent and the restructuring agreement was approved by all creditors, it is no longer necessary to approve the agreement in court. In addition, it will be possible to negotiate the conditions for the payment of receivables with the creditors, both individually and by convening them in a collective meeting. Also, there will be no need for layoffs, the stigma of insolvency will be eliminated and the entrepreneurial spirit will be developed,” states Bogdan Frigioiu, Senior Associate, ONV LAW.

Last but not least, in the preventive and insolvency restructuring procedures, electronic means of communication can be used and these measures will save many businesses in Romania, in their post-pandemic period adaptation struggle, according to ONV LAW specialists. 

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