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Insolvency is not necessarily a failure, but a legal procedure designed to offer a real opportunity for recovery to debtors in financial difficulty. Law no. 85/2014 on insolvency and pre-insolvency proceedings provides the legal framework, offering both protection for the debtor and a fair mechanism for satisfying creditors’ claims.

In this article, we briefly explain what insolvency is, when it can be triggered, what the key stages are, and how interested parties may be involved.

What Is Insolvency?

Insolvency is a financial state in which a debtor is unable to meet their due obligations towards one or more creditors, using the funds they have available.

According to the law:

• For legal entities, insolvency is presumed when the debtor has failed to pay debts for more than 60 days after the due date;
• For individuals, a separate legal framework applies (Law no. 151/2015 on the insolvency of individuals).

Who Can Request the Opening of Insolvency Proceedings?

• The debtor: through a self-declared application;
• A creditor: if they hold a certain, liquid, and due claim older than 60 days and of at least 50,000 RON;
• The insolvency judge: in specific cases, based on the judicial administrator’s report.

Stages of the Insolvency Procedure

1. Opening the Procedure

• The application is submitted to the competent tribunal;
• The court opens either the general or simplified procedure;
• A judicial administrator (for reorganization) or a liquidator (for bankruptcy) is appointed;
• The decision is published in the Insolvency Procedures Bulletin (BPI).

2. Observation Period

• Inventory of the debtor’s assets and liabilities;
• Submission of claim declarations by creditors;
• Preparation of preliminary and final claims tables;
• A reorganization plan may be proposed by the debtor, if applicable.

3. Judicial Reorganization

If there is a real chance of recovery, a plan may be implemented for up to 3 years. This plan must be approved by the creditors’ meeting and confirmed by the court.

The plan may include:

• Rescheduling of debts;
• Haircuts on claims;
• Debt-to-equity conversion (in limited cases).

4. Bankruptcy

If reorganization fails or is not feasible, the bankruptcy procedure begins:

• Liquidation of the debtor’s assets;
• Distribution of the collected amounts to creditors based on legal priority;
• Dissolution of the company and deregistration from the Trade Register.

What Are Creditors’ Rights?

• Participate in creditors’ meetings;
• Challenge other creditors’ claims;
• Propose a reorganization plan;
• Request conversion to bankruptcy if the plan fails;
• Nominate a preferred judicial administrator.

How SCPA Murar și Asociații Can Assist You

Our law firm has substantial experience in:

• Providing legal advice to companies facing financial distress;
• Representing creditors: claim submission, objections, participation in meetings;
• Drafting and negotiating reorganization plans;
• Working with licensed insolvency practitioners.

Conclusion

Insolvency is a mechanism for financial rebalancing, not a final sentence. With proper legal support and a realistic plan, many companies can avoid bankruptcy and recover. Whether you are a debtor or a creditor, knowing your rights and the legal procedures is essential.

📍 Contact

• Phone: +40 21 330 52 62
• Email: office@avocatmurar.ro
• Address: Str. Răsuri nr. 3, Parter, ap. 2 și 3, Sector 2, Bucharest
• Contact form: https://avocatmurar.ro/contact