Amendments In The Field Of Insolvency In The Pandemic Context

• Published date: 14 December 2020
• Subject Matter: Corporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Coronavirus (COVID-19), Financial Restructuring, Corporate and Company Law, Insolvency/Bankruptcy, Operational Impacts and Strategy
• Law Firm: Maravela, Popescu & Asociatii
• Author: Ms Dana Rădulescu and Anca Băiţan

1. General aspects

The primary legislation governing insolvency and restructuring proceedings is Law 85/2014 on preventing insolvency and insolvency proceedings¹ (the "Insolvency Law").

The Insolvency Law has been amended on October 2, 2018 by Government Emergency Ordinance no. 88/2018 for amending and supplementing regulations on insolvency² (the "G.E.O. no. 88/2018").

One of the main changes brought by G.E.O. no. 88/2018 was represented by the prerogative of the creditors owning receivables born during the insolvency proceedings and due for more than 60 days to initiate the enforcement procedure against the insolvent debtor, which severely disregards the very principles and protection ensured by the Insolvency Law.

Recently, on July 11, 2020, Law no. 113/2020 on the approval of G.E.O. no. 88/2020³ (the "Law no. 113/2020") brought several amendments detailed herein.

2. The general context

In view of the evolution of the international epidemiological situation caused by the spread of Coronavirus, the World Health Organization⁴ declared a pandemic situation on March 11, 2020.

A series of urgent measures with an exceptional character were taken in the social, economic and justice fields, on one hand, in order to limit the infection with Coronavirus and, on the other hand, to diminish the negative effects on the economy.

The major impact generated both on the global economy and on the national economy, which could be reflected as a negative evolution of the gross domestic product for the current year, as a consequence of the Covid-19 outbreak, imposes measures in order to mitigate these negative repercussions on the economy. In this regard, the member states of the European Union have already begun to promptly respond to the imperative of adopting instruments protecting the business environment⁵.

Thus, continuing the measures imposed during the state of emergency, the Government Emergency Ordinance no. 29/2020 regarding certain economic and fiscal-budgetary measures ("G.E.O. no. 29/2020")⁶ anticipates the inevitable confrontation with an extended payment incapacity or even with a sudden lack of cash-flow with respect to the small and medium-sized companies.

The measures, aimed at mitigating the socio-economic impact of the Coronavirus pandemic, concern the postponement of the credit rates payment for the benefit of the individuals and companies, whose incomes have been directly or indirectly affected, for a period of one to nine months, namely by the end of this year, at the latest.

At the level of the European Union, in order to mitigate the negative effects on the population standard of living and on the economy, the European Commission⁷ has adopted a wide set of economic measures, adapted the European budget provisions and revised the rules on state aid, instating the initiative to initially invest the amount of EUR 37 billion as a response to Coronavirus, in order to provide liquidities to small businesses and to the healthcare sector.

3. The economic context

The global nature of the spread of Coronavirus infection, according to Bloomberg⁸ initial forecast, could cost the world economy a price amounting to USD 2.7 trillion...