Government assistance in Romania is governed by Law no 143/1999 on state aid.
The Consiliul Concurenţei (Competition Council) can provide state aid to rescue and restructure firms in difficulty, subject to certain regulations and criteria.
Regardless of its size, a business is generally considered to be in difficulty in the following situations:
- for limited liability companies (SRL), when losses amount to more than half of the share capital and when more than one-quarter of the firm's capital has been lost over the previous 12 months;
- for companies in which at least some of the partners have unlimited liability for the company's debts, when losses amount to more than half of the share capital and when more than one-quarter of this capital has been lost over the previous 12 months;
- for companies of any legal form, when the business encounters conditions making it subject to compliance with legal procedures on reorganisation and bankruptcy.
A business may also, however, be considered in difficulty if the following characteristics are present:
- increasing losses;
- falling turnover;
- increasing stock volume;
- excess production capacity;
- reduced cash flow;
- growing debts;
- rising financial burden;
- falling or loss of net asset value.
Stabilising a business
Companies in difficulty may use the following strategies to recover their solvency and develop in the market:
- strategies for change under conditions of temporary maladjustment. These strategies are based on a forward-looking approach involving the launch of new products and expansion into under-developed markets;
- transformational and reorientation strategies. In this case, the business recognises that the future environment will be entirely different from that of the present. It will look to adapt using a new form of business organisation, property structure, technological potential or a new strategy for selling and buying;
- recovery or profit-making strategies. These strategies are necessary when a business shows weak or unfavourable returns, makes losses or is poorly adapted to the current economic environment and when restructuring and privatisation measures are necessary.
Access to different sources of finance can help overcome financial difficulties.
When filing for bankruptcy is the only option left for a business owner, it pays to cut your losses, initiate proceedings sooner rather than later, and move on to a new project.
Staggering of budget liabilities
In order for taxpayers to overcome the difficulties generated by the temporary lack of funds, as well as to prevent the accumulation of new debts, taxpayers can benefit from the provisions of Government Emergency Ordinance no 28/2011 regulating the permission to stagger payments, as amended.
The regulatory subject-matter of the ordinance concerns a procedure for granting facilities in the form of staggering the payment of the tax liabilities managed by the National Tax Administration Agency over a maximum period of 7 years.
The Ministry of Public Finance runs four state aid schemes. The Ministry's website offers detailed information about this.