When a Romanian company opens the insolvency proceedings, it must notify all the creditors and evaluate the capacity of the company to restructure its business. If these measures don’t follow the legal proceedings, the company may face problems that will not allow its reintegration into the economic circuit, say lawyers specialized in corporate and insolvency law of Pavel, Mărgărit & Associates Romanian Law Firm.
“After the Romanian company opened the insolvency proceedings, the insolvency practitioner (named by the court or by the debtor) must notify all the creditors in the creditor list, a list that includes their name and contact details. Insolvent companies must know that if they forget to notify a creditor, they may face bad consequences”, says Radu Pavel, lawyer specialized in corporate and insolvency practice area.
In the past years, Pavel, Mărgărit & Associates Romanian Law Firm ranked in second place in Restructuring and insolvency practice area, in the rankings realized by Legal 500 publication, the most important guide of law firms in the world, with the headquarters in London.
The procedures to be followed in order to notify the debtors and evaluate the restructuring chances of the company are:
Checking the registration of the creditors on table of receivables – “Usually, the debts amount must correspond with the commercial balance sheet of the Romanian company that opened the insolvency proceedings. Once it opened the insolvency proceedings, the debtor company will give the commercial balance sheet to the insolvency practitioner, who can verify if all the creditors are on the list”, says Romanian lawyer Radu Pavel. If there are differences between the balance sheet and the table of receivables, they might be observed by the judicial administrator.
Why is it important to notify the creditors – “If a company forgets to notify a creditor the restructuring procedure may be delayed and as well as company’s reintegration into the economic circuit”, points out lawyer Radu Pavel. Any creditor may confront the Insolvency Procedures Bulletin in order to verify whether or not the debtor has opened the insolvency proceedings. Afterwards, the creditor may send to debtor a Debt Statement in order to be included in the preliminary table of creditors. The Romanian insolvency law no. 85/2014 gives to the creditors that have not been notified the opportunity to register any time at the table of creditors. If a creditor discovers is not on the list, it will send the Debt Statement to the debtor company. If debtor’s insolvency proceedings are in a rather advanced phase, it may influence company’s restructuring plan.
When to reject a Debt Statement – There are a lot of situations where creditors do not have the right to be registered in the table of creditors: the payment obligation is not registered in the accounting documents, the claim is contested or simply does not exist. “At the same time, if a creditor has been notified and has not been registered in the table of creditors, then it loses this right. The notified creditors must register (by submitting the debt statement) within the deadline given by the judge”, says lawyer Radu Pavel.
How to evaluate the chances of restructuring of the company, after the final table of creditors is published – After the table of creditors is published and all the appeals and claims are solved, a reorganization plan is proposed. “The reorganization plan will include a payment schedule. If the company can produce enough liquidity to pay off its debts on time, then there are chances of restructuring. Also, the amount of debts may be reduced through a debt haircut, by cutting unprivileged debts. This measure will increase company’s chances to restructure”, says lawyer Radu Pavel.
Over time, Pavel, Mărgărit & Associates Romanian Law Firm advised both Romanian insolvent companies and creditors. “In the past years we have even managed to restructure 6 companies in the insolvency procedure: big manufacturers in the metallurgical field, IT and retail companies. However, in Romania, the success rate of company restructuring is only 3%. Also, some insolvent companies weren’t able to restructure their businesses based on their own liquidities so they received a capital infusion from an investor or sold some of their assets, to partially cover the debts and to continue the activity”, said Radu Pavel, Managing Partner of Pavel, Mărgărit & Associates Romanian Law Firm. Usually, the insolvency procedure is marked by strict deadlines. Exceeding these deadlines may lead to big losses for debtors or creditors. Therefore, in order to avoid such events, it is advisable for a company in insolvency or for a creditor to hire a lawyer specialized in corporate law and insolvency, say lawyers from Pavel, Mărgărit & Associates Romanian Law Firm.
Pavel, Mărgărit & Associates Romanian Law Firm is one of the top law firms in Romania, which offers legal services at the highest quality, beyond client’s expectations. The Law Firm approaches the cases with maximum professionalism and dedication. It’s ultimate goal is obtaining exceptional results and achieving the client’s objectives, in a time efficient manner. Among Pavel, Mărgărit & Associates clients are top multinationals and local companies. In 2019, the success stories of the Romanian Law Firm have brought recognition of the most prestigious international guides and publications. Thus, Pavel, Mărgărit & Associates Romanian Law Firm ranked second place in Romania in the rankings of business law firms with the most relevant expertise this year, realised by the Legal 500 publication, the most prestigious guide for law firms in the world, based in London, UK. The law firm is also recognized internationally by IFLR 1000 Financial and Corporate Guide 2019. Pavel, Mărgărit & Associates Romanian Law Firm is also the only law firm in Romania recommended by the Global Law Experts Director in London in the Dispute Resolution area of Practice. All the relevant information regarding Pavel, Mărgărit & Associates Romanian Law Firm including areas of practice and the most important deals can be found on the website www.avocatpavel.com, which is one of the most complex law firm websites in Romania.