Entrepreneurs may be able to avoid bankruptcy by anticipating difficulties - if they keep a close eye on the financial situation of their business.
Insolvency proceedings are applied to companies that can no longer pay their commercial debts. Insolvency is considered evident if the company, also known as the debtor, has not paid its debts to its creditors within 30 days after the payment deadline.
The types of proceedings that can be used are:
- general proceedings through which, after a period of observation, a debtor enters judicial reorganisation proceedings and then bankruptcy proceedings;
- simplified proceedings through which the debtor enters bankruptcy proceedings directly.
The legal provisions relating to judicial reorganisation and bankruptcy proceedings are stipulated in the Law on insolvency proceedings.
In accordance with the legal provisions, the bodies responsible for implementing insolvency proceedings are the following:
- courts of justice
- bankruptcy judges
- judicial administrators
Entrepreneurs having experienced bankruptcy should not lose confidence in their ability to embark on a new business.
Bankruptcy proceedings: a step-by-step guide
Bankruptcy proceedings are commenced on the basis of an application submitted to the court by the debtor or its creditors. An application may also be submitted by other persons or institutions specified in the Law on insolvency proceedings.
The debtor must submit the application to the court with jurisdiction over its headquarters within a maximum of 30 days from when insolvency occurs.
The forms for the procedural actions taken in insolvency proceedings are available in electronic format on the website of the Buletinul Procedurilor de Insolvență, BPI (Insolvency Journal).
The bankruptcy judge will, by way of a decision to initiate general proceedings, appoint a judicial administrator, or a temporary liquidator in the event of a decision to initiate simplified proceedings.
After the proceedings have been initiated, the General Meeting of Shareholders may appoint a special administrator who will represent the interests of the company and take part in the proceedings.
Reorganisation proceedings mainly involve drawing up and implementing a reorganisation plan that makes provision either for the restructuring and continuation of the company's activity, or for the liquidation of certain assets.
The organisation plan will not exceed a period of three years and must include a debt payment schedule.
Liquidation of the assets of a company undergoing bankruptcy proceedings is carried out by a liquidator who reports to the bankruptcy judge. Liquidation will begin after an inventory of the assets has been taken and after they have been valued.
The bankruptcy proceedings will be closed by means of a court ruling. This will be communicated by the bankruptcy judge to the local Directorate for Public Finance and the Oficiul Național al Registrului Comerțului, ONRC (National Trade Register Office).
The Insolvency Journal is edited and published by the National Trade Register Office in electronic format in order to publicise the summonses, invitations and notifications issued by the courts during insolvency proceedings.