The code will have a similar impact on wholesalers and will eliminate jobs, the press release reads.
The new Insolvency Code cramps the reorganization of insolvent firms, according to Vasile Godindca-Herlea, CITR managing partner. Their bankruptcy will have a ripple effect, so distributors and clients will also be affected, he added.
According to Herlea, over 200,000 firms in the European Union go bankrupt yearly and 1.7 million people lose their jobs.
Under the new regulations, requests to start insolvency proceedings may be filed only for debts equal to or higher than 40,000 lei (some EUR9,000). The threshold is valid for both debtors and creditors.
Reorganization plans may be proposed by the debtor, following approval by shareholders, if proceedings were started at its request, by the court-appointed administrator or by creditors holding at least 20% of the total value of receivables.
Debtors who had filed for insolvency over the past five years may not propose reorganization plans.
Reorganization will be carried out in one year and the process may be extended only by 12 months.
The new regulations will also apply to insolvency requests currently under analysis. Experts in the field say this will impair already adopted reorganization plans, which consider a three-year reorganization time limit and for which negotiations with main creditors have already started.
The Insolvency Code, adopted recently through a Government emergency ordinance, was published in the Official Journal Friday. Under the new regulations, an entity is considered insolvent if its exigible debts to creditors are overdue by more than 60 days, instead of 90 days currently. Insolvency is imminent if it is obvious the debtor will not be able to pay its debts in due time.