Lawyer’s opinion: Government rewrites the Insolvency Law – Extended liability and accelerated procedures

Insolvency lawyer in Romania: Changes in the new law and directors’ liability

The government recently announced a package of significant amendments to Law no. 85/2014 regarding debt recovery in insolvency procedure and insolvency proceedings in Romania, justifying the need for these changes by aiming to streamline debt recovery in insolvency procedure and reduce the duration of processes. The core of these changes is the expansion of directors’ liability (both de jure and de facto), the acceleration of procedural stages through new legal tools, the strengthening of the state’s role as a creditor, and the introduction of restrictions for those who have managed companies facing financial difficulties. An insolvency solicitor in Romania will thus need to carefully analyze the impact of these provisions on clients, as they affect both the rights of the debtor and the interests of creditors.

Lawyers from the Pavel, Mărgărit & Associates team, with extensive experience in insolvencies, insolvency proceedings in Romania, and commercial litigation, offer comprehensive legal services. Whether it is initiating insolvency proceedings in Romania, drafting an insolvency petition in Romania, defending a debtor, or protecting a creditor’s interests, our team of insolvency lawyers in Romania, restructuring lawyers in Romania, and commercial law experts approaches each case with professionalism and strategy. Through solid knowledge and direct involvement in complex cases, Pavel, Mărgărit & Associates provides clients with tailored legal solutions designed to ensure stability and concrete results in sensitive insolvency situations.

Extended Liability for De Jure and De Facto Directors in Insolvency Proceedings in Romania

One of the changes concerns directors’ liability. The law proposes holding accountable both de jure directors and de facto directors—those who effectively manage a company in insolvency, even if they do not appear in official documents. It introduces the presumption that failing to submit financial statements or tax declarations equates to non-compliance with legal accounting requirements. Considering this, an insolvency lawyer in Romania plays a crucial role in defending clients’ interests against accusations based on such presumptions. In practice, this framework can drastically change how commercial disputes are resolved and how a restructuring lawyer in Romania builds a defense strategy.

The extended liability requires directors to be held responsible not only for their own decisions but also for the actions of individuals acting under their influence or direction. This means any mismanagement, delay in paying tax obligations, or accounting errors can be directly attributed to the director. Moreover, extended liability applies even when a company’s corporate bankruptcy liquidation in Romania is caused by lack of oversight or negligence. Therefore, an insolvency solicitor in Romania becomes essential for risk prevention, advising directors, and building a solid defense strategy against these new legal responsibilities.

Faster Recovery and Reduced Duration of Insolvency Proceedings in Romania

Another key objective of the amendments is shortening the process duration. Currently, a company undergoing insolvencies can remain blocked for years without tangible results for creditors. The new framework aims to accelerate debt recovery in insolvency procedure and ensure rapid liquidation of assets. The opening of insolvency proceedings in Romania becomes better controlled, and judicial administrators can immediately request the liquidation in Romania of a company if its financial situation deteriorates. A commercial law lawyer must advise both debtors and their partners to prevent irreversible consequences. Completing procedures after compliance with the reorganization plan will reduce bureaucracy but will require careful verification by an insolvency lawyer in Romania.

Procedures allow for faster debt recovery in insolvency procedure, giving creditors the opportunity to recover amounts owed within a much shorter period. Judicial administrators coordinate the corporate bankruptcy liquidation in Romania and distribution of funds according to legal priorities, while an insolvency solicitor in Romania ensures the correctness and legality of these operations. Thus, both debtors and creditors benefit from a more transparent and predictable process, reducing dispute risks and providing solid legal protection throughout the insolvency proceedings in Romania.

Prohibition on Founding Companies or Acting as Directors in Insolvencies

A significant measure is the introduction of a prohibition on founding new companies or managing firms for individuals held liable in a company under insolvency proceedings in Romania. This measure lasts five years and is recorded in the Trade Registry, making it enforceable against any creditor or debtor checking an individual’s history. This prohibition affects both de jure and de facto directors. From a legal perspective, a commercial lawyer must advise clients regarding the risks and ways to avoid sanctions. At the same time, these restrictions may become a source of disputes, and an insolvency lawyer in Romania is obliged to challenge disproportionate or abusive measures.

In addition, the prohibition raises strategic challenges for the business plans of affected individuals and their company relationships. An insolvency solicitor in Romania can assess opportunities to contest the prohibition, verify its legality in the Trade Registry, and guide clients in protecting their rights, reducing the risk of additional sanctions or operational blockages. This strategic approach maintains credibility before creditors and prevents unjustified disputes arising from the prohibition during insolvencies.

Prior Notification of Tax Creditors Before the Opening of Insolvency Proceedings in Romania

The amendments also introduce a new requirement: notifying tax creditors at least 15 days before initiating insolvency proceedings in Romania. This provision protects the state and allows timely action regarding a debtor’s situation. All communications are to be conducted electronically, including reports and documents submitted by the administrator or liquidator. This requires insolvency advice in Romania with close attention to deadlines and document preparation. Furthermore, by expanding the definition of “affiliate” and limiting their number in the creditors’ committee, the process becomes more transparent and balanced.

This prior notification mechanism helps prevent tax and commercial disputes, giving creditors time to organize before proceedings are initiated. A commercial lawyer can analyze documents and deadlines to ensure all formalities are respected, avoiding later challenges and additional risks for companies under insolvencies. Proper management of this obligation allows both debtors and creditors to benefit from a safer, more predictable process.

“Recent amendments to Law no. 85/2014 regarding debt recovery in insolvency procedure, including expanded directors’ liability and prohibitions on founding or managing companies, significantly transform the business environment. In this context, collaboration with an insolvency lawyer in Romania, commercial law lawyer, or litigation lawyer is no longer just recommended; it is essential to protect the interests of both debtors and creditors. These professionals play a crucial role in managing legal responsibilities, monitoring proceedings, and preventing disputes, ensuring compliance with new legal provisions,” stated Coordinating Lawyer Dr. Radu Pavel of Pavel, Mărgărit & Associates.

The amendments to Law no. 85/2014 regarding debt recovery in insolvency procedure create a stricter framework for companies in difficulty. They reinforce directors’ responsibility, shorten procedural timelines, and increase the state’s involvement as a primary creditor. For the business environment, these changes directly affect how a company undergoing insolvencies manages its relationships and how a debtor can access the process. In this context, the role of a commercial law lawyer, restructuring lawyer in Romania, and insolvency lawyer in Romania is essential, not only for preventive advice but also for defending rights in court. Through their expertise, an insolvency solicitor in Romania can turn the challenging process of filing an insolvency petition in Romania into a strategic and controlled procedure where clients’ interests are protected and the balance between debtor and creditor is maintained according to legal principles.

Pavel, Mărgărit & Associates is one of Romania’s leading law firms, providing the highest quality legal services. Its clients include multinational and local companies. In 2024, the firm’s success stories earned international recognition from leading guides and publications. The firm ranked 3rd in Romania in the Legal 500 ranking for business law expertise and is internationally recognized by IFLR 1000 Financial and Corporate 2024. It is also the only Romanian law firm recommended by the international director of Global Law Experts in London in Dispute Resolution. All relevant information about Pavel, Mărgărit & Associates can be found at www.avocatpavel.ro.