Last updated: 31 May 2019
Nowadays, financial issues are no longer an exception to the rule, but a constant reality in the life of a company. Within such fragile environment, a series of unfortunate events may suffice to trigger serious financial issues. If only a single company faces difficulties in paying its debts, then this can result in irreversible consequences on the businesses of its partners.
According to statistics published by the National Trade Register Office, 986 insolvency proceedings were initiated only within the first 2 months of 2019. And, even if figures show a decrease as compared to the previous year, one cannot overlook reality.
The main aim of insolvency proceedings is to cover the debts of the debtor company by allowing it to redress its activity, as the case may be, by granting it real „immunity” against any enforcement actions.
This was the initial idea, because as we have pointed out in one of our previous articles, Government Ordinance no.88/2018 had already introduced a legislative novelty relating to the possibility to initiate enforcement actions for the debts accumulated during insolvency proceedings.
CHALLENGES
Since the entering into force of the Government Ordinance no.88/2018 which aims at streamlining the mechanism for tax receivables collection from insolvent companies, tax authorities have been sending demands for payment and seizing the companies’ bank accounts, irrespective of the current phase of the insolvency proceedings.
Thus, in the chapter related to the corporate reorganization period of the Law no.85/2014 on insolvency prevention and insolvency proceedings, it is stated that enforcement proceedings can be initiated for the debts accumulated during the insolvency proceedings and that are older than 60 days.
Nevertheless, the text of the law gives rise to various divergent interpretations according to the interests of those who construe it.
In practice, tax authorities construe legal provisions in the sense that, irrespective of the initiation date of the insolvency proceedings and of the phase of the proceedings, current debts can be enforced without restriction.
Legal doctrine and even courts stated clearly that enforcement actions can be initiated under the conditions set forth by the law only after the entry into force of the Government Ordinance no.88/2018, namely after October 2nd.
Moreover, some courts rightly admitted appeals against enforcement actions initiated by authorities against companies subject to insolvency proceedings which were not in the reorganization phase.
But the most important challenge posed by enforcement actions is related to the assets subject to these proceedings.
For instance, given the particular character of the sole bank account that a debtor company has to open during the insolvency proceedings, the law expressly states that this account cannot be frozen, i.e. blocked.
That being said, according to the majority opinion, the company’s sole bank account, the assets affected by preference causes for the benefit of other debtors, assets used by the debtor in its usual activity, assets playing a major role in carrying out the redressing plan are all assets that cannot be subject to enforcement actions within the insolvency proceedings.
Finally, the competent court to judge on the appeals for annulment against the enforcement proceedings is another challenge to deal with.
In fact, while some consider that the legal authority in this matter belongs to syndic judges, given their general competence with respect to all claims related to insolvency proceedings, others believe that the authority should reside with the enforcing court, namely the court of first instance to which the debtor is assigned according to their registered headquarters.
Thus, irrespective of the court chosen by the plaintiff – court of first instance or syndic judge – it is likely that one of these courts declines its competence to the benefit of the other.
In conclusion, as long as these problems are not addressed to one way or another, the risk of abuse coming from certain debtors remains high and companies under collective proceedings must treat responsibly all the debts that could be subject to such enforcement actions.