The obligation to ask for the opening of the insolvency proceedings

The current state of emergency impacted radically both the ongoing insolvency proceedings and the potential ones. While the state of the ongoing procedures is somehow clear (i.e. the procedural hearings are suspended, but not the activity of the insolvency practitioners, activity that must continue), not the same is true for the insolvency claims that must be submitted by the directors of the debtors – legal entities. We underscore that the directors have the obligation, and not the right, to submit a claim for the opening of the insolvency proceedings within 30 days from the date the insolvency occurred (as per article 66(1) of Law 85/2014 regarding the insolvency prevention proceedings and the insolvency proceedings). The breaching of such obligation may have serious consequences for the directors, i.e. the personal liability for the debts of the insolvent company, as per article 169(1)(c) of Law 85/2014 or even the triggering of the criminal liability for simple bankruptcy as per article 240 of the Criminal Code – if the claim for the opening of the insolvency proceedings is filed later than 6 months from the expiry of the deadline provided by article 66(1) of Law 85/2014. In some opinions, the 30-day term mentioned above is a limitation period or a time limit and consequently suspended de jure as per article 62(1) of the Decree 240/2020. We cannot agree with such an interpretation. In our opinion, the 30-day term provided by Article 66(1) of Law 85/2014 is neither a limitation period, nor a time limit, but a maximal deadline provided by the insolvency law, deadline upon which the criminal liability or the civil liability of the directors is assessed. Nevertheless, the filing of such a claim is currently ineffective. Namely, as a general rule, during the state the sate of emergency, the claims submitted by the insolvent companies will not be ruled upon by the insolvency judge. This conclusion is supported both by Decision no. 53/18.03.2020 of the Managing Board of the Bucharest Court of Appeals and by the more recent Decision no. 8/30.03.2020 of the Managing Board of the Bucharest Tribunal. On a country level, we identified three exceptions from this general rule. There are three jurisdictions where the tribunals do process the debtors’ claims for opening the insolvency proceedings, namely:

» The courts under the jurisdiction of the Pitești Court of Appeals[1], i.e. the Argeș Specialized Tribunal and the Vâlcea Tribunal;

» The courts under the jurisdiction of Târgu Mureș Court of Appeals[2], i.e. the Mureș Specialized Tribunal, the Harghita Tribunal. A special mention is made with regards that these courts will settle the claims regarding the opening of the insolvency proceedings if the judge will consider, based on the actual specifics of each case, that the matters are exceptionally urgent;

» The courts under the jurisdiction of Suceava Court of Appeals[3], i.e. the Botoșani Tribunal, the Suceava Tribunal.

Consequently, in most cases, these claims for the opening of the insolvency proceedings will not be settled during the state of emergency. Notwithstanding, under normal circumstances, it is precisely these claims that must be settled with maximum urgency, namely in 10 days from the date the claim is submitted, as per article 66(10) of Law 85/2014. This urgency is justified by the protection offered to the debtors by the opening of the proceedings, i.e. the staying of the enforcement proceedings as per article 75 of Law 85/2014. In the same vein, similar measures were taken in many European jurisdictions[4]:

1. Austria relaxed the insolvency legislation for a 6 months period in which the directors do not have the obligation to submit claims for the opening of the insolvency proceedings;

2. The Czech Republic suspended the obligation to request the opening of the insolvency proceedings during the state of emergency and for 6 months after the ending of the state of emergency, however no later than 31 December 2020;

3. Germany decided the suspension of the same obligation until 30 September 2020, with the possibility to prolong such period until 31 March 2021;

4. Luxemburg suspended sine die this obligation;

5. Spain relaxed the strict deadline of 2 months within which the directors must submit the claim for the opening of the insolvency proceedings.

We conclude that the most appropriate legislative solution is the suspension of the directors’ obligation to ask the opening of the insolvency proceedings for the duration of the state of emergency and for an additional period of 3 to 6 months after its ending.

 

[1] Decision no. 8 of 18 March 2020 of the Managing Board of Pitești Court of Appeals, article 1 letter b.3.: http://portal.just.ro/46/Documents/Hot%C4%83r%C3%A2rea%20nr.8%20din%2018.03.2020.docx?fbclid=IwAR2JKTfJs_ISaZkrZYqSiuJWbPLpyUAOU5_YEJ5j7cX9Yu89W2607fmlno4 [2] Decision no. 16 of 18 March 2020 of the Managing Bord of the Târgu Mureș Court of Appeals al, article 2.2.: http://portal.just.ro/43/Documents/Hotarari%20de%20colegiu/2020/HOTARAREA%20NR.%2016-2020%20EXTRAS.pdf?fbclid=IwAR27CnVwC9ptyCgrAv_1y9T0lKT8V6e7A8aS5W2-5tf1Top-C_558DUkXNE [3] Decision no. 10 of 11 March 2020 of the Managing Board of Suceava Court of Appeals, page 9: http://portal.just.ro/39/Documents/Hotarari%20colegiu/2020/Hot.%20nr.%2010%20a%20%20Colegiul%20de%20Conducere%20CASV%20din%2011.03.2020.pdf?fbclid=IwAR22nmAdrHqGOXFA7xxma-vMVzIOd0gKZCGjZBudVD-Btmwxxe91pCfuUrk [4] See https://www.insol-europe.org/technical-content/covid19