Arrangement with creditors
The arrangement with creditors is a procedure for saving the companies that are in a financially difficult state and is performed outside court, amiably between debtor and creditors.
The law of the arrangement with creditors offers the possibility for the debtor, whose company crosses a financial crisis that might be remedied, to ask from the creditors the chance to recover, avoiding this way the procedure of legal reorganization.
The arrangement with creditors is regulated by Law no. 381/2009 to article 1.
An agreement entered between the debtor, on one side, and the creditors that hold at least two thirds from the value of the accepted and uncontested receivables, on the other side, by which the debtor proposes a recovery plan of its company and for covering the receivables owed to these creditors, and the creditors accept to support the debtor’s efforts to overcome the difficult state of the debtor’s company.
WHO CANNOT REQUEST AN ARRANGEMENT WITH CREDITORS?
The arrangement with creditors may be requested by any debtor, as defined to art. 1, with certain exceptions:
- if against the debtor it was ruled an irrevocable conviction order for economic fraud;
- if against the debtor it was opened the insolvency procedure, in the last five years, before the offer of an arrangement with creditors;
- if with 3 years before the arrangement with creditors, the debtor had the benefit of another arrangement with creditors;
- if the debtor and/or shareholders / associates / partners or its administrators have been finally convicted for fraud, fraudulent management, breach of trust, embezzlement, perjury, forgery offenses or infractions provided by the Law on competition no. 21/1996, republished with subsequent amendments, in the last 5 years before opening the procedure provided by this Law;
- if the members of the management and/or supervision bodies of the debtors are liable, under the conditions of Law no. 85/2006 on the insolvency procedure, with subsequent amendments, for bringing it in insolvency.
The provisions of letter b) shall remain applicable.
- If the debtor is recorded with any actions in the Tax Clearance Certificate, according to the Government Order no. 75/2001 on the organization and functioning of the tax certificate, republished with subsequent amendments.
By introducing these exceptions, the Romanian lawgiver considered the protection of the honest debtor, who have not had the intention to defraud the creditors or to delay the procedure, because the non-execution or inadequate execution of the arrangement by the debtor, automatically leads to its bankruptcy, without the possibility to request the legal reorganization from the bankruptcy judge.
The person supervising the voting procedure of the arrangement, who shall try to bring the parties to an acceptable compromise and supervise the execution of the arrangement by the debtor, shall be the conciliator, this being a professional insolvency practitioner who mediates the conclusion of the arrangement and controls its execution by the debtor, informs the creditors and takes sanctioning measures for breaching the arrangement.
The debtor can formulate the request for an arrangement with creditors, addressed to all creditors, and which shall be registered in the Law Court.
The procedure shall be developed in the Council Chamber and shall be maintained confidential on its entire term, the confidentiality being mandatory for all the persons and institutions that are part or are involved in this.
The project of the arrangement with creditors shall present in detail the analytical situation of the debtor’s assets and liabilities, the presentation of reasons based on which the debtor reached the danger of insolvency, and also the projection of the financial – accounting evolution for the next six months. In addition, the arrangement project shall contain a recovery plan of the debtor.
The arrangement offer shall be voted by creditors, in term of maximum 30 calendar days, the arrangement being considered approved if there are fulfilled the votes of the creditors that represent two thirds from the value of the accepted and uncontested receivables.
In case this majority is not reached, the debtor has the right after minimum 30 days, to present a new offer for an arrangement.
The creditors that voted against the arrangement may claim the termination of the agreement, in term of 15 days from its mentioning at the Trade Register.
The effects of reaching an arrangement
From the fulfillment date of the advertising formalities, it is suspended any individual prosecution against the debtor and also the lapse of the prescription of the right to claim the forced execution of the receivables against the debtor, and also the interests, penalties and any expenses related to the receivables.
In addition, during the period of the approved arrangement, it cannot be opened the insolvency procedure against the debtor. Any creditor that holds an enforceable title may join the arrangement. The request shall be submitted at the conciliator, and the he will include it in the table of creditors.
If in term of 18 months there have not been fulfilled the obligations provided in the arrangement, the creditors may vote, at the conciliator’s proposal, the extension of the arrangement term with maximum 6 months compared with the initial term.