If debates go as they should, the new code could come into force by midyear. The reason for the law is “to contribute to improving the business environment”, Justice Minister Robert Cazanciuc said during the “New insolvency code. Solution for today’s business environment?” event organized by ZF in partnership with the Justice Ministry, Romania’s central bank, PwC, Casa de Insolventa Transilvania, ZRP Insolvency, NNDKP and INPPI, the institute that trains insolvency practitioners.
A number of 120,000 companies have gone insolvent in Romania in the last five years, and experts in this field admit that some cases were fraudulent, with companies taking advantage of the favorable legislation. They do recommend the lawmakers to not go to extremes and compromise the chances of recovery for those companies that can reorganize using the procedure.
“It is necessary for this procedure (insolvency i.e.) to ensure protection of creditors, preserve their interests, or else there’s a risk lending might be discouraged,” says Bogdan Olteanu, central bank deputy governor.
On the other hand, insolvency practitioners say that the new code is good, but a series of provisions in it might lead to a 70% reduction in the chances companies trying to get recover have of reorganizing.
“We are trying to arrive at a more effective and balanced law and I hope that by the end of this parliamentary session we’ll have an enforceable law, in tune with the times we’re living in, when things are happening really fast,” said Liviu-Bogdan Ciuca, chairman of the Discipline and Immunity Committee of the Chamber of Deputies.
(English version by Loredana Fratila-Cristescu)