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The Insolvency Law is amended as of 1st February

The Insolvency Law is amended as of 1st February as result of the enforcement of the new Penal codes and Penal Procedure codes. The specialists of Transilvania Insolvency House (CITR), the leader of the Romanian insolvency market, analyse the impact of the amendments in the deployment of the insolvency procedures.

“The change shall have a huge impact over the legal system as a whole, influencing here and there also the insolvency field, even though not in a very large extent. Practically, only a few articles of Law no. 85/2006 shall be amended through these new codes – especially art. 36 and art. 53″, stated Vasile Godinca-Herlea, associate coordinator of CITR.

The art. 36 of Law no. 85/2006 provided that, in the moment of opening of the insolvency procedure, “all the legal, extralegal actions or forced execution measures” drawn up against the debtor companies, shall be suspended. By means of the amendments brought by the new codes, it will make an exception from this suspension the trial cases of the civil actions within penal processes.

The art. 53 of Law no. 85/2006, in the form prior to amendment, provided that all the goods alianated by the legal administrator/liquidator within the insolvency procedure are acquired free of any liabilities, such as mortgage, real estate securities of any kind, including ensuring measures instituted during the penal process. The provision is very useful, facilitating the capitalisation of assets within the procedure. The amendment partially regards the text, showing that the goods are acquired free of liabilities, but the ensuring measures or the preventive ones taken during the penal process are excepted. This means that the person who buys a good upon which a sequestration is applied, should either take the good with that sequestration or to wait for the legal administrator to obtain its annulment by the penal bodies. As both options are unlikely to happen, this amendment shall practically mean a blocking of the sales with nefarious effects upon the insolvency procedure. We hereby mention that by blocking these goods upon the sale, it shall not ensure an actual recovery of the prejudice by the victim, because this will have the same treatment for distributions, regardless of the fact if there is a sequestration or not. The provision is thus useless from the point of view of the penal process, instead being able to aggravate the insolvency procedure.

„The quality of these two amendments is questionable, in the sense that they do not resonate at all with the mechanisms of the insolvency procedure. Although it is for sure a good intention – to protect the possibility to recover the prejudice of the civil part within a penal process – in reality their effect will be one that aggravates the insolvency procedure” added Vasile Godinca-Herlea.

Another amendment is the list of infractions committed by the management bodies, which cancels the right of the debtor to propose a reorganizing plan. Also the new Penal Code repeals a series of infractions from the Insolvency Law, following that they are to be regulated within the Code. It is mainly about the simple bankruptcy (art. 240 of the new Penal Code) and the fraudulent management (art.242 par. 2 of the new Penal Code).

Transilvania Insolvency House

:: The source: JURIDICE.ro

Denis BORTIS

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