Secondary insolvency proceedings in Romania: Current legal challenges in the application of Regulation (EU) No. 848/2015 for foreign companies with a branch in Romania

Cross-border insolvency and secondary proceedings: The European legal framework and conditions of admissibility in Romania

The constant evolution of international trade and the dynamics of financial markets require rigorous cooperation between judicial authorities in order to protect commercial relations, the legal framework being essentially defined by Regulation (EU) No. 848/2015 on insolvency proceedings. This European regulation operates in conjunction with national legislation, namely Law No. 85/2014 on insolvency prevention and insolvency proceedings, as well as Law No. 31/1990 on companies, in order to establish the conditions under which a local branch of a foreign entity may be subject to collective proceedings. The major challenge lies in the correct determination of the concept of establishment and in managing the conflict between the universal application of the law of the state of origin and the protection of local assets, in a context in which branches do not enjoy separate legal personality. This article analyses the current challenges related to applications for the opening of secondary insolvency proceedings, the interpretation of the notion of establishment, the impact of the case law of the High Court of Cassation and Justice, and the optimal procedural strategy for protecting the rights of the creditor.

In this context, The Romanian Law Firm Pavel Mărgărit and Associates provides specialized legal services in the field of cross-border insolvency and commercial law, ensuring full legal assistance in managing complex restructuring proceedings for companies with a multi-jurisdictional presence, offering specialized services in insolvency, and ensuring the necessary support for the opening of insolvency proceedings and the recovery of debts. The firm’s team includes a litigation lawyer in Romania, a litigation lawyer in Bucharest, and an experienced litigator in Romania, acting as a company lawyer and insolvency lawyer in complex cross-border matters. The services also involve a restructuring lawyer, an insolvency solicitor, and collaboration with leading insolvency law firms, addressing matters of insolvency, company insolvency, and company bankruptcy. Clients seeking an insolvency lawyer near me, a bankruptcy and insolvency lawyer, or dedicated insolvency attorneys benefit from coordinated strategies in forced execution in Romania, enforcement in Romania, and enforcement proceedings in Romania, as well as structured debt recovery procedure support for each creditor, assisted by a qualified debt recovery lawyer.

Company lawyer in Romania. Secondary insolvency proceedings for foreign companies with a branch in Romania: Conditions and the notion of “establishment” under Regulation 848/2015

A relevant example in this context is an insolvency or restructuring proceeding concerning a company incorporated in another EU Member State (where its centre of main interests – COMI – is located), but which operates in Romania through a branch (where it has an establishment). When resolving an application for the opening of secondary proceedings, the Romanian syndic judge must verify whether the action initiated before the foreign court constitutes a main insolvency proceeding within the meaning of Regulation (EU) 2015/848, this being an essential condition for allowing the initiation of territorial proceedings in Romania pursuant to Article 3(2) of the same regulation.

The court’s assessment must also focus on demonstrating the existence of an establishment on Romanian territory, within the meaning of Article 2(10) of the Regulation. Thus, local creditors or the debtor’s representatives must prove that the business location in Bucharest represents a stable place of operations where non-transitory economic activity is carried out with human resources and assets or services. Meeting these technical criteria is fundamental for recognising the jurisdiction of Romanian courts to manage secondary proceedings and for ensuring the legal protection of assets located in Romania.

The provisions of the Regulation concerning the right of a creditor to request the opening of secondary proceedings are primarily aimed at offsetting the effects of the universal application of the law of the Member State in which the main proceedings are opened, allowing, under certain conditions, the opening of secondary proceedings in order to protect local interests as well. The concept of “establishment” should be interpreted as including the place where the debtor company’s operations are carried out in the Member State where it has a branch; otherwise, the interests of creditors established in that Member State would not benefit from the protection provided by the Regulation through the opening of secondary proceedings. Moreover, when adopting national provisions governing the conditions for opening secondary proceedings, Member States are required, according to the consistent case law of the Court of Justice of the European Union, to ensure that the effectiveness of the Regulation, in light of its objectives, is fully achieved.

An insolvency lawyer, acting as a litigation lawyer in Romania and company lawyer, can provide qualified legal advice regarding insolvency proceedings when seeking the opening of insolvency proceedings for a company in financial distress. Such professionals, including an experienced litigator in Romania and litigation lawyer in Bucharest, have the expertise required to demonstrate the fulfilment of establishment conditions, together with a restructuring lawyer and insolvency solicitor, in order to manage company insolvency, avoid company bankruptcy, and implement effective debt recovery procedure mechanisms for each creditor, assisted by insolvency attorneys, insolvency law firms, and a dedicated debt recovery lawyer, with experience in forced execution in Romania, enforcement in Romania, and enforcement proceedings in Romania.

Commercial litigation lawyer in Romania. Why Romanian creditors request secondary insolvency proceedings and why applications are rejected in practice

The opening of secondary or territorial insolvency proceedings in Romania provides local creditors with an important mechanism for protecting their claims, allowing the single company to be summoned through its branch to answer with the assets and rights located on national territory. Under Regulation 848/2015, such proceedings facilitate the application of immediate preservation measures, such as prohibiting the relocation or disposal of assets located in the state where the secondary establishment exists, thus ensuring the integrity of the insolvency estate for the benefit of Romanian entrepreneurs.

At the same time, a major advantage of initiating such proceedings is cross-border judicial cooperation, which enables reciprocal exchange of information between the main and secondary proceedings. Creditors can thus benefit from transparency in the process of filing and verifying claims and can more easily identify the assets of the parent company available locally. These legal instruments are designed to protect the rights of domestic creditors, providing effective levers of control over the foreign debtor’s assets under Romanian jurisdiction.

Recent Romanian case law shows that applications filed by Romanian creditors for the opening of secondary insolvency proceedings against a company with its main registered office in another EU Member State and a branch or agency registered in Romania are often rejected as being filed against an entity lacking legal capacity.

The courts emphasise that the direct applicability of Regulation (EU) No. 848/2015 on insolvency proceedings is possible only under the conditions of Article 3(2), establishing that the application for opening insolvency proceedings in Romania must be filed exclusively against the parent company, as the holder of the assets located on the territory of the Member State. Since the branch is considered a subdivision without legal personality and without its own assets, judges hold that the state of insolvency is assessed solely by reference to the main entity, the recognition of the main proceedings opened in another Member State being automatic and unconditional, regardless of prior publication with the Trade Register. Although there are decisions suggesting that a branch could be liable for obligations undertaken in its own name, the prevailing judicial practice confirms that the lack of legal capacity of the branch leads to the dismissal of incorrectly directed applications, requiring a rigorous procedural strategy for the proper summons of the parent company through its legal representatives.

A litigation lawyer in Romania, acting as a litigation lawyer in Bucharest and experienced litigator in Romania, can provide specialised legal assistance to avoid the rejection of such applications when company insolvency affects legitimate interests. Through the involvement of a company lawyer, an insolvency lawyer, and a bankruptcy and insolvency lawyer, creditors receive guidance on debt recovery procedure, forced execution in Romania, enforcement in Romania, and enforcement proceedings in Romania, with the support of insolvency attorneys, insolvency law firms, and a dedicated debt recovery lawyer, ensuring that the creditor’s rights are effectively protected in cases of insolvency and company bankruptcy.

Commercial litigation lawyer in Romania. Rejection of applications for opening secondary insolvency proceedings: Analysis of recent judicial practice

It should be noted, first of all, that the distinction between “parent company” and an entity without legal capacity in the case of a single company with its main office in an EU Member State and branches or agencies registered in Romania contradicts the reasoning contained in Decision No. 6 of 15 May 2023 of the High Court of Cassation and Justice, delivered in a recourse in the interest of the law. Through this decision, it was established, in the interpretation and uniform application of Article 651(1) of the Romanian Civil Procedure Code, that where the enforceable title concerns a subdivision without legal personality, territorial jurisdiction of the enforcement court may be determined by reference to the secondary establishment of the debtor legal entity, namely the registered office of that subdivision.

The Supreme Court held that, in situations where the enforceable title targets a subdivision without legal personality, territorial jurisdiction of the enforcement court may be established by reference to the secondary establishment of the debtor. Under Article 227(2) of the Civil Code, branches and working points represent secondary establishments that confer territorial affiliation to the legal person, being attributes of identification evidenced through public registers. Consequently, whenever such structures appear in the enforceable title as holders of the obligations to be performed, the competent enforcement court may be the court within whose jurisdiction the subdivision’s establishment is located, as it legally corresponds to the notion of the debtor’s registered office, thus ensuring a correct application of Article 651(1) of the Civil Procedure Code.

A litigation lawyer in Romania with extensive experience, acting as a litigation lawyer in Bucharest and skilled litigator in Romania, can invoke solid legal arguments before the courts, offering specialised assistance in insolvency proceedings. With the support of a company lawyer, insolvency lawyer, restructuring lawyer, and insolvency solicitor, parties involved in insolvency, company insolvency, and company bankruptcy benefit from coherent representation. The involvement of insolvency attorneys and recognised insolvency law firms ensures effective strategies in forced execution in Romania, enforcement in Romania, and enforcement proceedings in Romania, while safeguarding each creditor’s interests through a structured debt recovery procedure led by a specialised debt recovery lawyer.

Enforcement lawyer in Romania. Insolvency proceedings as collective enforcement: The relevance of High Court Decision No. 6/2023 for secondary insolvency proceedings

Insolvency is defined as a special form of collective enforcement proceedings, which makes the decisions of the Supreme Court extremely relevant for clarifying the conditions for opening secondary proceedings in the case of Romanian branches. In a context where national case law remains marked by contradictory interpretations, it is important to recognise that only the single company has the capacity to hold rights and obligations in its own name. Consequently, any legal relationship attributed to a branch arises, in reality, directly within the patrimony of the parent company, regardless of the location of its secondary establishments in various EU Member States.

The branch is not an independent entity, but rather a means of extension of the founding enterprise, created for the purpose of facilitating foreign capital investments and carrying out its own economic activity. It is established through the will and funds of the parent company, which allocates the resources necessary for its organisation and operation. From this perspective, the branch serves as a territorial instrument through which the parent company fulfils its commercial objectives, thereby justifying the unitary application of insolvency rules to the entire patrimony of the single legal entity.

An enforcement-focused litigation lawyer in Romania, together with a litigation lawyer in Bucharest and seasoned litigator in Romania, can provide legal assistance in enforcement-related disputes arising in insolvency. Acting as a company lawyer and insolvency lawyer, with support from a bankruptcy and insolvency lawyer, such professionals manage forced execution in Romania, enforcement in Romania, and enforcement proceedings in Romania. Through collaboration with insolvency attorneys, insolvency law firms, and a qualified debt recovery lawyer, they ensure that the creditor’s rights are respected within each debt recovery procedure, even in complex cases of company insolvency and company bankruptcy.

Insolvency lawyer in Romania. How to avoid the exception of lack of legal capacity: Procedural strategy for opening secondary insolvency proceedings in Romania

To avoid the dismissal of an application for opening secondary insolvency proceedings on the grounds of the branch’s lack of legal capacity, the lawyers of the Romanian Law Firm Pavel, Mărgărit and Associates recommend filing the action directly against the parent company in the EU Member State where its centre of main interests (COMI) is located. It is essential that service of process be carried out both at the debtor’s main registered office, through the practitioners appointed in the main proceedings (if already initiated), and at the branch’s registered office in Romania. In this respect, the syndic judge is requested to apply Article 38(1) of Regulation 848/2015, which requires the court to immediately notify the foreign practitioner or the debtor in possession, granting them the legal opportunity to be heard regarding the filed application.

Additionally, for enhanced protection of the insolvency estate, creditors may request the Romanian court, by way of a presidential injunction, to order urgent preservation measures pursuant to Article 38(3) of the Regulation, in conjunction with Article 70 of Law No. 85/2014. These steps aim at blocking any attempts to relocate or dispose of the debtor’s assets located in Romania, as well as suspending operations involving the transfer of assets or patrimonial rights. By applying such measures under sanction of nullity, the preservation of local assets and the protection of Romanian creditors’ interests are ensured until the final resolution of the application for opening insolvency proceedings.

“These new procedural measures regarding the correct service of process on the parent company must be handled with care in order to avoid the dismissal of applications for opening secondary insolvency proceedings due to the lack of legal capacity of the branch.” stated Dr. Radu Pavel, Managing Partener of the Romanian Law Firm Pavel Mărgărit and Associates.

“Clarifying the legal status of the branch and correctly using the notification mechanisms provided by Regulation (EU) No. 848/2015 are mandatory to overcome procedural barriers related to legal capacity and to ensure that local creditors gain access to the debtor’s assets located in Romania.” stated Dr. Nicoleta Mirela Năstasie, Senior Lawyer and insolvency practitioner at the Romanian Law Firm Pavel Mărgărit and Associates

In conclusion, insolvency proceedings in Romania concerning foreign companies with secondary establishments represent a complex legal mechanism requiring careful harmonisation between Regulation (EU) 848/2015 and national legislation in order to overcome obstacles related to the legal capacity of branches. The success of an application for opening secondary proceedings depends on a rigorous procedural strategy that includes the correct summons of the parent company and the request for preservation measures over local assets. Consequently, the Romanian Law Firm Pavel, Mărgărit and Associates recommends engaging a specialised insolvency lawyer, a bankruptcy and insolvency lawyer, and an experienced company lawyer, capable of managing company insolvency, company bankruptcy, forced execution in Romania, enforcement in Romania, and enforcement proceedings in Romania, while ensuring effective debt recovery procedure solutions for each creditor, with the assistance of a qualified debt recovery lawyer.

Pavel, Margarit and Associates Law Firm is one of the top law firms in Romania, providing high-quality legal services. The firm’s clients include multinational and domestic companies of great magnitude. In 2025, the law firm’s success stories brought it international recognition from the most prestigious international guides and publications in the field. As a result, Pavel, Margarit and Associates Law Firm ranked 3rd in Romania in the Legal 500’s ranking of business law firms with the most relevant expertise. The law firm is internationally recognized by the IFLR 1000 Financial and Corporate 2025 guide. Additionally, Pavel, Margarit and Associates Law Firm is the only law firm in Romania recommended by the international director of Global Law Experts in London in the Dispute Resolution practice area. All relevant information about Pavel, Margarit and Associates Law Firm can be found on the website www.avocatpavel.com.