Law on the procedure of

reorganization and judicial liquidation*

 

CHAPTER I

General provisions

 

Art. 1. - The present law applies to traders - natural persons and trading companies - unable to further reimburse their commercial debts, hereinafter referred to as debtor.

Art. 2. - The object of the law is to institute a reorganization procedure, intended to redress the debtor and to pay liabilities or liquidate debtor's property.

Art. 3. - For the meaning of the present law, debtor's property includes all goods and patrimonial rights of the debtor - including those acquired during the procedure established by the present law - which can constitute the object of forced execution, according to the provisions of the Code of civil procedure.

 

CHAPTER II

Bodies that apply the reorganization and judicial liquidation procedure

 

Art. 4. - Bodies that apply the procedure are: the court, the syndic judge, the administrator, the liquidator, the meeting of creditors and the committee of creditors.

 

Section 1

The court

 

Art. 5. - All procedures provided by the present law are the exclusive competence of the court having jurisdiction over the location of the debtor's main business office.

Art. 6. - Maim court attributions, according to the present law are the following:

a) to judge appeals of debtors against petitions of creditors for bankruptcy;

b) to appoint the syndic judge and, as the case may be, the administrator or liquidator, to control their activity and, as the case may be, to replace them;

c) to approve the ahpointment of some persons assisting the syndic judge in the fulfilment of his obligations;

d) to judge petitions for withholding the debtor's right to carry on its activity;

e) to judge actions filed by syndic judge for cancellation of patrimonial transfers anterior to the petition for bankruptcy;

f) to judge appeals of the debtor or of the creditors against decisions of the syndic judge;

g) to confirm the reorganization plan or, as the case may be, the liquidation plan, after they are voted by creditors;

h) to judge appeals against the decision of tne syndic judge to let the debtor continue its activity, in case of reorganization;

i) to solve objections to semestrial reports and to the final report of the syndic judge;

j) to issue the decision of closing the procedure.

Art. 7. - Court decisions are subject to appeal in cases expressly provided by the present law, in all other cases, they are final and executory.

 

Section 2

The syndic judge

 

Art. 8. - The syndic judge is appointed by the president of the court, on the basis of Article 13, paragraph 3 of Law No.92/1992 on judicial organization.

Art. 9. - In fulfilling his obligations, the syndic judge may appoint experts. The appointment and level of renumeration of such persons shall be submitted to the court’s approval. Remunerations shall be paid from the debtor's property.

Art. 10. - (1) Main attributions of the syndic judge, according to the present law, are the following:

a) to place seals;

b) to inventory debtor's goods and to take appropriate measures for preserving such;

c) to establish the dates of meetings of creditors - whenever he deems necessary - and to preside over such meetings;

d) to inform the court about any problem that should be solved by it;

e) to manage the activity of experts hired for assistance;

f) to examine credits and, as the case may be, to introduce objections to them;

g) to supervise the cashing of credits involving goods belonging to the debtor's property or amounts of money transferred by the debtor before the petition for bankruptcy procedure was filed;

h) to examine the debtor's activity, in relation with the actual situation;

i) to receive payment on behalf of the debtor and to consign such amounts, within 24 hours, in a bank account opened in the name of the debtor's property, with an exclusive right of disposal for the purpose of the procedure;

j) to transform goods belonging to debtor's property into cash;

k) to perform any other activities requested by the law.

(2) The syndic judge establishes, by a minutes, the attributions of the administrator and of the liquidator.

Art. 11. - The debtor and any of the creditors may file an appeal regarding the measures taken by the syndic judge, in cases expressly provided by the present law. Such appeal must be filed in maximuln 10 days after the date when the measure was taken. If it deems necessary, the court will convene a meeting, summoning the author of the appeal, the debtor, the creditors, with the participation of the syndic judge, in order to find a solution.

Art. 12. - At any stage of the procedure, the court may replace a syndic judge with another, by means of a motivated minutes, given in the Council Hall.

 

Section 3

The meeting of creditors. The committee of creditors

 

Art. 13. - (1) Known creditors shall be convoked by the syndic judge any time he deems necessary. He must, however, convoke them in case creditors - with secured and unsecured debts - who hold at least half of the debtor's debt do request it.

(2) The sessions of meetings of creditors shall also be attended by two delegates of the debtor's employees, voting for their debts, representing salaries and other financial rights.

(3) The debtor shall also attend - unless exempted by the syndic judge - as well as a member of the territorial chamber of commerce and industry.

(4) The sessions of meetings of creditors shall be presided over by the syndic judge.

Art. 14. - (1) In sessions of meetings of creditors, creditors shall have the right to analyze the debtor's situation, the measures taken by the syndic judge and the consequences of such, and to propose, with motivation, other additional measures.

(2) After examination by the syndic judge of the reorganization plan or, as the case may be, partial sale plan or liquidation plan, such plan shall be submitted to the vote of the meeting of creditors, according to the conditions of Article 63 of the present law.

(3) Furthermore, there shall also be submitted to the vote of the creditors the syndic judge's proposals to sell important goods of the debtor's property, namely: land, plants, equipment, etc.

Art. 15. - (1) In the first session of the meeting of creditors, the syndic judge shall appoint a committee of 3-5 creditors chosen among unsecured creditors or partially secured creditors, on a voluntary basis.

(2) During his activity, the syndic judge will be entitled to petition request from the committee of creditors or a delegate of such.

Art. 16. - (1) The committee of creditors is included in the category of those entitled to petition the court, in case such was not proposed by the debtor and no reorganization plan

was approved, according to the conditions of Article 75 of the present law, that it withholds the debtor's right to carry on his activity.

(2) The committee of creditors may be authorized by the court to file claims for the cancellation of patrimonial transfers - effected by the debtor and damaging for the creditors - in case such claims were not filed by the syndic judge.

 

Section 4

The administrator

 

Art. 17*. - In maximum 45 days after the opening of the bankruptcy procedure provided in the present law, creditors holding at least 50% of credit value may decide upon the hiring of an administrator, who will be appointed by the court. The administrator shall be a chartered accountant, an auditor, or shall hold a degree in economic science or in law, and he shall also have at least 5 years of practical economic or legal experience.


* Article 17 was modified according to Government Order No. 38/August 28, 1996, published in the "Monitorul Oficial" (Official Gazette of Romania), Part I, No. 204/Aagust 30, 1996, as follows:

«Article 17 is completed with paragrahh (2), having the following contentens:

„(2) In the hanking system, the manager may also be a juristic person, in both cases the appointment

being made with the compulsory advice of the National Bank of Romania and of the Ministry of Finance".

Art 18. - (1) Main attributions of the administrator are, as the case may be, the following:

a) to supervise administrative operations;

b) to assist the debtor in all or some administrative acts;

c) to manage, totally or partially, the debtor's activity.

(2) The court may modify the administrator's attributions, upon request from him, from the committee of creditors or its delegate, or from the Public Ministry.

(3) In all cases in which an administrator was appointed, he shall apply the procedure provided in the present law, fulfilling the attributions delegated by the syndic judge.

 

CHAPTER III

Procedure

Section 1

 Petitions for bankruptcy

 

Art. 19. - The procedure shall be initiated on the basis of a petition filed in court by the debtor or by creditors, or by the territorial chamber of commerce and industry.

 

§1. Debtor petition

 

Art. 20. - (1) The debtor, unable to repay its outstanding debts with its available financial resources, may address the court in order to he applied the provisions of the present law.

(2) The petitions of trading companies shall be signed by the persons who, according to setting up papers or statutes, are qualified to represent them.

Art. 21. - (1) The debtor's petition shall be accompanied by the following documents:

a) balance sheets and copies of current accounting records;

b) a list of the debtor's entire propenty; for real estate, data included in real estate publicity records shall be mentioned;

c) a list of creditors' names and addresses, regardless of their type of debt: outstanding or under condition, in cash or not, due or not yet due, not contested or contested, indicating the amount, the cause and the preference rights;

d) the profit and loss account for the previous year;

e) a list of associates with unlimited liability, for general partnership companies and limited partnership companies;

f) a declaration by which the debtor indicates his intention of reorganizing his activity or of liquidating his property.

(2) If the debtor does not possess, when filing his petition, any of the information indicated in paragraph (1), he will be entitled to submit such infoxmation to the court, within 10 days; otherwise, his petition shall he rejected.

Art. 22. - (1) In case of a petition filed by a general or limited pantnership company, such petition shall not be deemed as equally made by associates with unlimited liability or, according to the conditions of articles 24-26 of the present law, as also filed against them.

(2) A petition filed by an associate with unlimited liability or against such associate, for his debts, shall bear no legal effects as to general or limited partnership company in which he is an associate.

Art. 23. - The court shall not receive the reorganization petitions of debtors which, during the 5 previous years, already filed such a petition or constituted the object of such a petition filed by creditors.

 

§ 2. Petitions of creditors or territorial chambers of commerce and industry

 

Art. 24. - (1) Any creditor having an outstanding debt, in cash and due, may file a petition in court against a debtor who ceased payment for at least 30 days.

(2) The sole decline of some payments on the basis of some exceptions that the debtor deems, in good faith, as founded, does not constitute by itself a proof that payment has ceased.

(3) Territorial chambers of commerce and industry shall be entitled to file a petition against such debtor which, according to data available to them, is in a notorious position of payment cessation.

Art. 25. - In 48 hours from filing of the petition, the court shall communicate a copy of the petition to the debtor and the territorial chamber of commerce and industry and shall order that a copy of such be displayed on the courtroom door.

Art. 26. - (1) If within 5 days from reception of the copy of the petition filed by the creditors, the debtor contests the fact that it is in a payment cessation position, according to the conditions of Article 24 paragraph (1), the court must convene a session within 30 days, summoning the creditors who filed the petition, the debtor and the territorial chamber of commerce and industry.

(2) On petition from the debtor, the court may oblige the creditors who filed the petition to consign, within 5 days a bail of maximum 30% of the credit value. Such bail shall be returned to creditors if their petition is admitted. If their petition is rejected, the bail may be used to cover the debtor's damages. If the bail is not consigned in due time, the petition for bankruptcy procedure shall be rejected.

(3) If the court establishes that the debtor is in a payment cessation position, it shall reject the debtor's appeal and the procedure shall continue.

(4) If the court establishes that the debtor is not in a payment cessation position, it shall reject the creditors' petition and shall order that such decision be posted on the courtroom door. In case of petition rejection such petition shall be deemed as bearing no effect, starting from the moment of its filing.

 

Section 2

 Procedure follow-up

 

Art. 27. - (1) Following the filing of the debtor's petition, the unrefutation of the creditors' petition by the debtor or the rejection of the debtor's appeal against such petition, the court shall notify the creditors, the debtor and the Register of Commerce Office where the debtor is registered, in order for a mention to be made.

(2) All expenses generated by these information and publicity measures shall be paid from the debtor's property.

Art. 28. - (1) The notifcation shall also include the convocation for the first session on the meeting of creditors, which must be convened in maximum 30 days after the date of filing of the debtor's petition or of the creditors' petition unrefuted by the debtor or in maximum 20 days after rejection of the debtor's appeal against such petition.

(2) The notification shall indicate the place, date and hour of the first session of the meeting of creditors.

Art. 29. - The debtor must supply the file with documents requested in Article 21 paragraph (1), in maximum 15 days after reception of the notification provided in Article 27, in case it does not appeal against the creditors' petition or after rejection of his appeal against the creditors' petition, according to Article 26 paragraph (3), in case it filed such appeal.

Art. 30. - 5 days after filing the debtor's petition or after expiration of the appeal term of the debtor against the creditors' petition, or after rejection of the debtor's appeal against such petition, the court shall appoint a syndic judge, according to the conditions of Article 8, who shall have such duties as established in Article 10, and an administrator, according to the provisions of Article 17, who shall have such duties as established in Article 18.

Art. 31. - After the date of filing of the debtor's petition or after expiration of the appeal term of the debtor against the creditors' petition, or after rejection of the debtor's appeal against such petition, all legal or other actions, prior to the petition for bankruptcy, for recovery of debts from the debtor or his property are suspended.

Art. 32. - Filing of the debtor's petition or expiration of the appeal term of the debtor against the creditors' petition, or rejection of the debtor's appeal against such petition shall suspend any prescription terms for actions provided in Art. 31. Such terms shall resume their course 30 days after rejection of the petition or liquidation of the procedure.

Art. 33. - The debtor is bound to provice the syndic judge and the administrator, both in the case of reorganization and the case of judicial liquidation, with all information requested by them regarding its activity and goods, as well as with the list of payments and patrimonial transfers made by it, during 90 days prior to the filing of the reorganization or judicial liquidation petition.

Art. 34. - Except for cases provided in the present law or those authorized by the court, any setting-up of personal or real guarantees, effected after the debtor's petition or after expiration of the term of appeal of the debtor against the creditors' petition, or after rejection of the debtor's appeal against such petition shall be deemed null.

Art 33. - The syndic judge or the administrator shall draft and submit to the court, in maximum 30 days after their appointment, a detailed report on the causes and circumstances that led to payment cessation, indicating the nature of unfulfilled obligations and any other facts regarding the debtor's situation, as well as information about the possible liability of any administrator, director, auditor, associate, employee or other person.

 

Section 3

The situation of some legal acts of the debtor

 

Art. 36. - (1) In maximum 30 days after opening of the reorganization procedure, all creditors with debts anterior to payment cessation, except for employees, shall submit a declaration of debt in the meeting of creditors.

(2) The declaration of debt must be made even if debts are not established by a title.

(3) Debts to the state budget and state social security budget are temporarily taken into account for the quantum declared by the debtor.

Art. 37. - (1) After opening of the reorganization procedure, it is forbidden to the debtor's management, subject to cancellation, to alienate without the agreement of the court any shares or social parts held by the debtor which is the subject of this procedure.

(2) The syndic judge or the administrator shall make a mention of unavailability of shares and social parts, according to paragraph (1), in the special record.

Art. 38. - Measures provided in the present section are general and apply both in reorganization and in judicial liquidation cases.

Art. 39. - The syndic judge may petition the court for cancellation of any forged or fraudulent act that the debtor made, damaging for creditors, during the 3 years preceding the filing of the petition for bankruptcy.

Art. 40. - (1) The syndic judge may petition the court for cancellation and recovery from third parties of ihe following patrimonial transfers:

a) gratuitous transfers made by the debtor, during the 3 years preceding the filing of the petition for bankruptcy; humanitarian sponsorship are eecepted;

b) commercial operations in which the debtor's payment obviously exceeds the other party's services, effected during the 3 years preceding the filing of the petition for bankruptcy;

c) any act concluded with the intent of all parties involved to take away goods from creditors or to harm their rights in any other way, concluded during the 3 years preceding the filing of the petition for hankruptcy;

d) property transfers from the debtor to a creditor on account of a prior debt or for the advantage of such, effected during the 120 days preceding the filing of the petition for bankruptcy, such transfers having as consequence the increase of the amount that the creditor should receive in case of a judicial liduidation;

e) the creation or completion of a legal security, effected during the 120 days preceding the filing of the petition for bankruptcy;

f) the creation or completion of a mortgage, a pledge or any other security for a formerly unsecured debt, effected during the 120 days preceding the filing of the petition for bankruptcy or, in case of a debt to a shareholder or associate of the debtor, effected during the year precedilig the filing of the petition for bankruptcy.

(2) The following commercial operations, concluded during the year preceding the filing of the petition for bankruptcy, with persons having legal relations with the debtor, may also be canceled and services recovered if they harm the interests of the creditors:

a) with an active partner or a partner owning at leasT 20% of the trading company's capital, in case the debtor is a limited partnership company or, respectively, a general partnership company;

b) with a shareholder owning at least 20% of the debtor's shares, in case the debtor is a joint-stock company;

c) with an administrator, director or member of supervision bodies of a joint-stock company;

d) with any other natural or juristic person having a dominant position over the debtor or its activity;

e) with a co-owner over a common asset.

(3) In situations provided in paragraphs (1) and (2), the computation of terms, as the case may be, also takes into account the expiration of the term for appeal against the petition of creditors by the debtor or the date of rejection of the debtor's appeal against such petition.

Art. 41. - The petition for cancellation of a patrimonial transfer, according to articles 39 or 40, may be filed by the syndic judge in maximum 1 year after the date of filing of the debtor's petition or after expiration of the appeal term of the debtor against the cretlitors' petition, or after rejection of the debtor's appeal against such petition. The court may authorize the committee of creditors or the administrator to file such a petition, if the syndic judge refuses to do so.

Art. 42. - As an exception to the provisions of Article 40, neither the syndic judge, nor the committee of creditors and the administrator may request cancellation of a patrimonial transfer of the debtor occurring in the course of its normal activity, or in case it was exchanged for an equivalent and reasonable value, or if, as a consequence of the transfer, the other party granted the debtor an unsecured credit, which was not repaid by the debtor until the date of the petition for bankruptcy, until expiration of the appeal term of the debtor against the creditors' petition, or until rejection of the debtor's appeal against such petition.

Art. 43. - (i) The third party acquiring such transferred patrimony, canceled according to Article 41, shall be bound to return such transferred good to the debtor's property or, in case such good does not exist any longer, to return its value as of the date of transfer accomplished by the debtor.

(2) The third party acquiring such transferred patrimoniy, after returning to the debtor's properky the value of the good that was transferred to it by the debtor, shall have a debt of the same value against such property, in case such third party accepted the transfer in good faith and without intention of blocking, delaying or deceiving the debtor's creditors.

Art. 44. - The syndic judge, the committee of creditors or the administrator may recover from a subacquirer the good or value of the good transferred by the debtor only if the subacquirer did not pay the corresponding value of the good and knew that the initial transfer could be cancelled.

Art. 45. - (1) The syndic judge may order that the notification of registration of a petition for cancellation of a patrimonial transfer be mentioned in real estate publicity records.

(2) Any person acduiring a title or any security or any real right tzpon such fixed asset, after the mention of such notification, shall have its title or right conditioned by the right of recovery of such asset.

Art. 46. - (1) For a maximum increase of the value of the debtor's property, the syndic judge may accept or reject any contract, including credit extension contracts, unexpired rents or other long-term contracts, as long as such contracts are not already totally or substantially implemented by all parties involved. The syndic judge must answer in maximum 30 days to the other party's request for choosing between rejection or acceptance of the contract; in the absence of such answer, the syndic judge will not be able to ask for execution of the contract any longer, and the contract shall be deemed as rejected.

(2) In case a contract is rejected, a claim for damages may be filed by the harmed party against the debtor's property.

(3) If a contract could be executed only at a specific date expressly provided in it, and coming after the date of filing of the debtor's petition or after expiration of the appeal term of the debtor against the creditors' petition, or after rejection of the debtor's appeal against such petition, the contract shall be deemed as rejected.

(4) If the seller of a fixed asset retained the ownership title until full payment of the sale price, the sale shall be deemed as completed by the seller and shall not be subject to the provisions of paragraph (1) of this article.

(5) A labour contract or lease of a building, as tenant, shall be rejected only with due observance of legal notce terms. Contractual notice terms, if longer than legal ones, shall not be observed.

(6) In a contract providing periodical payments by the debtor, the acceptance of the contract shall not bind the syndic judge or the administrator to pay arrears for periods prior to the opening of the procedure. Regarding such arrears, claims may be formulated against the debtor's property.

Artt. 47. - If a movable asset, sold to the debtor and not paid by it, is transiting at the date of filing of the debtor's petition or expiration of the appeal term of the debtor against the creditors' petition, or rejection of the debtor's appeal against such petition, and such asset is not yet available to the debtor and no other parties have acquired rights upon it, then the seller may take back its good. In this case, all expenses shall be borne by the seller and it must repay the debtor any advance payment. If the seller accepts that the asset be delivered, it may recover the price by introducing its debt in the debt record. If the syndic judge asks that the asset be delivered, he must take measures in order to pay the entire contractual price from the debtor's property.

Art. 48. - If the debtor is party to a contract providing the transfer of some goods or titles of value, rated at the commodities exchange or on another market, at a certain date or in a specific period of time, and the time limit falls or the period ends after the date of filing of the debtor's petition or after expiration of the appeal term of the debtor against the creditors' petition, or after rejection of the debtor's appeal against such petition, the difference between the acquisition price and the rated price, at the dates specified above, at the commodities exchange or on markets of the delivery location or, if no location can be established, at the nearest commodities exchange or market, shall be paid to the debtor's property, in case such property is a credit property, and shall be introduced in the debt record, in case it is a liability of such property.

Art. 49. - If an agent, holding titles for goods that must be received or for merchandise, becomes the subject of a petition for bankruptcy, the owner shall be entitled to take back its titles or merchandise or to demand that their value be paid by the agent.

Art. 50. - (1) In case a debtor holds merchandise as consignee, or holds any other asset belonging to another person, at the date of filing of the debtor's petition or expiration of the appeal term of the debtor against the creditors' petition, or rejection of the debtor's appeal against such petition, the owner is entitled to recover its asset, if the contract allows it, except for the case when the debtor has a valid security right over the asset.

(2) If the merchandise is not available to the debtor at one of the dates mentioned in paragraph (1), and it cannot recover it from the actual holder, the owner is entitled to have debts introduced in the debt record, at the value the merchandise had at such date. If the debtor holds the merchandise at such date and loses it afterwards, the owner may request that the entire merchandise value be introduced in the debt record.

Art. 51. - The fact that an owner is involved in a procedure opened according to this law does not cancel a contract for lease of a building used by a tenant, unless otherwise stipulated. However, the syndic judge may refuse to provide any landlord services to the tenant for the duration of the lease. In this case, the tenant may leave the building and file a claim or may continue to use the building, deducting from the rent the cost of services incumbent on the landlord. If the tenant chooses to continue to use the building, it shall not be entitled to any claim for damages against the debtor, being entitled only to deduct from the rent the cost of services incumbent on the landlord.

Art. 52. - The syndic judge or the administrator may refuse to accept the execution of a contract by which the debtor agreed to provide specialized or strictly personal services, except for the case when the creditor agrees and accepts the execution of services by a person appointed by the syndic judge or the administrator.

Art. 53. - (1) No service provider - power, gas, water, telephone or other similar services - is entitled, during the reorganization period, to modify, deny or temporarily interrupt such services to a debtor or to a debtor's property, because of the filing of a petition by the debtor, or against the debtor, or because the debtor did not pay such provided services prior to the filing of the petition for bankruptcy.

(2) As an exception to the provisions of paragraph (1), the court may request the debtor, upon the provider's recluest, to deposit a bail at a commercial bank, as a condition for that company in order to carry on its activities, during the procedure. Such a bail cannot exceed 30% of the cost of services provided to the debtor and unpaid.

Art. 54. - If an associate in a general partnership company, i a limited partnership company, a limited liability company, or a shareholder in a joint-stock company is a debtor under a procedure provided by the present law, and if the debtor's implication in such a procedure does not result in the dissolution of such company, the syndic judge may request liquidation of the debtor's rights in such company - according to the last approved financial report - or may propose that the debtor remains an associate, if the other associates agree.

 

Section 4

 The plan

 

Art. 55. - (1) The debtor - as a consequence of the declaration given according to Article 21 paragraph (1) letter f) of the present law -, the creditors owning at least one-third of the value of secured credits, or unsecured creditors - others than those provided in Article 108 - owning at least one-third of the value of unsecured credits may propose a plan. In the same way, the associates of general partnership companies, the associates of limited partnership companies and shareholders holding at least one-third of the nominal capital of a joint-stock company may also propose a plan.

(2) The plan must provide either the reorganization and continuation of the debtor's activity, according to the latter, or the sale of the debtor's property in sequence, partially or totally, as a working whole, in order to obtain either the maximum value, or liquidation.

(3) Declarations of debtors, natural persons, effected according to the conditions of Article 21, paragraph (1), letter f), regarding their intention of reorganizing the activity shall not be accepted and no plan proposed by such debtors shall be admitted according to the conditions of Article 62 if such debtors were, in the previous 5 years, debtors in a procedure according to the present law or were convicted in a final manner for: fraudulent bankruptcy, offenses against private or public property, forgery, false witness or offenses ruled by Law No. 26/1990 regarding the Register of Commerce or Law No. 11/1991 regarding unfair competition.

(4) The plan must be submitted in maximum 60 days after the date of filing of the debtor's petition or after expiration of the appeal term of the debtor against the creditors' petition, or after rejection of the debtor's appeal against such petition. The syndic judge may extend this term up to 90 days.

(5) All expenses regarding the plan, including those related to its acceptance procedure, shall be borne by the debtor's property.

Art. 56. - (1) In case continuation of the activity is proposed, the draft reorganization plan shall indicate redressing prospects in relation with possibilities and the debtor's specific activity, with available financial means and the market demand regarding the debtor's offer.

(2) The draft reorganization plan based om continuation of the activity shall indicate the modalities in which the liabilities will be liquidated, it shall detail and justify the level and

prospects of employment, the social conditions intended for continuation of the activity, as well as other such objectives.

Art. 57. - If the draft reorganization plan for redressing by continuation of the activity provides personnel dismissal for economic reasons, measures already taken shall be indicated and actions and prospects for professional reorientation of personnel shall be presented.

Art. 58. - The reorganization plan based on continuation of the activity may also provide a capital increase. In such case, the syndic judge shall propose the court to convene the extraordinary general meeting of shareholders for acceptance or rejection of the redressing proposal involving capital increase.

Art. 59. - (1) In case redressing of the debtor depends upon replacement of one or more managers of the debtor, the court may order so, upon request from the syndic judge, the prosecutor or from its own initiative.

(2) For the same purpose and in the same conditions, the court may suspend the voting right of the debtor's managers, regardless of the fact that they receive retribution or not. In such cases, the court shall order the appointment of a mandated agent who shall exercise voting right.

Art. 60. - Upon request from the administrator, the debtor, the representative of creditors or from its own initiative, based on the report of the syndic judge, the court may decide at any time total or partial sale or judicial liduidation of the debtor's property, motivated by the failure of the reorganization plan.

Art. 61. - The draft liquidation plan must provide in detail the following:

a) how, when and to what extent secured creditors, various categories of privileged creditors, associates and shareholders shall be repaid or given other compensation for their debts by conversion of their debts into parts of the debtor's nominal capital or by novation, what securities shall be offered to every category, in which categories debts shall be repaid in full or shall not be otherwise disadvantaged by the plan;

b) if and to what extent the debtor and the associates of general partnership companies and the associates of limited partnership companies shall be disburdened of existing debts;

c) what compensation shall be given to all categories of creditors, compared with what they should receive by distribution, if this could be done, in case of a judicial liquidation;

d) how and to whom shall be sold parts of the debtor's property and what effects this could produce, especially regarding the continuation of utilization of part of the debtor's company, the employment of employees, the repayment of creditors and financial projects constituting the basis of the possibility of application of the plan.

Art 62. - (1) The syndic judge shall accept a plan proposed by legally relevant parties and including all reduested information. The syndic judge may ask the opinion of an expert, confirming the possibility of implementation of the plan prior to its acceptance. The expert's remuneration shall be borne by the debtor's property. Those who proposed the plan, the debtor and the committee of creditors, if any, shall be heard before taking a decision regarding the plan.

(2) Any accepted plan shall be:

a) filed to the court's secretariat and accessible to all interested parties, which may request a copy of it;

b) communicated to all known creditors, to the debtor and to all associates or shareholders.

(3) The syndic judge shall order that the acceptance of the plan be published in the Official Gazette of Romania, Part IV, indicating the source of the proposal, the date when the plan will be voted and the fact that voting through correspondence is admitted, with legalization of the creditor's signature by the notary public, communicated by any means and registered with the court. From the moment of its publication, all interested parties shall be deemed as having knowledge about the plan.

Art. 63. - (1) No later than 30 days after communication of the plan, according to Article 62 paragraph (2) letter b), the court shall convene a meeting with secured, priority and unsecureil creditors. The debtor, the syndic judge and the administrator shall be summoned in writing. Creditors with subordonated debts, shareholders and associates may attend the meeting, but they are entitled to vote, regarding the plan, only if the plan gives them a less favourable treatment than a judicial liquidation.

(2) If several plans are admitted by the syndic judge, such plans shall all be voted in the same court hearing.

(3) Only creditors with undisputed debts shall be entitled to vote regarding the plan.

(4) The following categories of creditors shall vote separately:

a) every creditor whose secured debt exceeds 10% of the value of all debts against the debtor's property;

b) any other creditors with secured debts;

c) creditors with priorities mentioned in Article 107 points 2 and 4;

d) unsecured creditors;

e) if they are entitled to vote according to paragraph (1):

- shareholders or debtor's associates;

- every category of creditors with subordinated debts, according to the provisions of Article 108.

(5) At the beginning of the voting procedure, the court shall inform the present creditors about valid votes, received from creditors in writing.

(6) A plan shall be deemed accepted by a category of creditors if, in every category, the holders of a majority of debt value or of other rights vote the acceptance of the plan. It shall also be deemed accepted by every category of creditors which is not disadvantaged by it. A category of creditors shall be deemed disadvantaged if its members should receive, at the date of confirmation of the plam, less than the full equivalent of their debts or rights.

Art. 64. - (1) A plan shall loe confirmed by the court if the following conditions are met:

a) at least two of the categories of creditors mentioned in Article 63 paragraph (4) accept the plan, on condition that at least one of the disadvantaged categories accepts the plan;

b) all categories of disadvantaged creditors as well as every member of a category which did not accept the plan are treated in a fair and equal manner by the plan. A fair and equal treatment means that:

- none of the disadvantaged categories of creditors which do not accept the plan shall receive less than it would have in case of a judicial liquidation;

- no category or member of a category receives more than the full value of its credit or another compensation equal to the actual value of its credits or rights;

- all creditors belonging to a category are treated in the same manner, except the case when every member of a category consents in writing to an unequal treatment.

(2) If a category of disadvantaged creditors did not accept the plan, then the debtor or any shareholder, associate or holder of a part of the nominal capital of the debtor shall retain nothing of the debtor's property value; the debtor or any shareholder or holder of a part of the nominal capital of the debtor shall not be considered as receiving a part of the debtor's property, if the plan provides that it retains or receives ownership of a value that does not exceed its financial contribution till the date of confirmation of the reorganization plan.

(3) If, according to the conditions of paragraph (1) of the present article, more than one plan can be confirmed, the court shall confirm the plan of the debtor. If the debtor's plan does not meet the conditions provided in paragraph (1), the court shall confirm the plan accepted by the most disadvantaged categories of creditors.

(4) When confirming, the court may impose certain conditions or limitations to the debtor regarding its activity, according to the confirmed plan.

Art. 65. - (1) When the decision confirming a plan comes into force, the debtor's activity is reorganized accordingly and the debts and rights of creditors and other interested parties are modified as provided by the plan. In case of forced execution, the confirmed plan shall be deemed as a final decision against the debtor.

(2) If no plan is confirmed, the court shall order that the syndic juclge liquidates without delay the goods belonging to the debtor's property.

(3) The remuneration of persons hired according to Articles 9, 17 and 97 of the present law and other administrative expenses shall be fully paid at tl e date of confirmation of the plan, except for the cases when interested parties agree, in writing, to other payment terms. The plan must stress how such payment shall be effected.

 

Section 5

Reorganization

 

Art. 66. - The debtor shall be bound to apply, without delay, the structural changes provided by the plan. The court may order that the syndic judge supervises the debtor's activity until application of such measures, but not in excess of one year after confirmation of the plan.

Art. 67. - (1) If the debtor declares its intention of reorganizing its activity - according to the conditions of Article 21 paragraph (1) letter f) - and then the reorganization plan is confirmed by the court - according to the conditions of Article 64 -, it shall be able to continue its activity and administer its property, under the supervision of the syndic judge, until the court issues a motivated order regarding cessation of reorganization and liquidation of the debtor's property.

(2) In the case of the reorganization of a trading company, such company shall be managed by the persons legally enabled to represent it, under the supervision of the syndic judge. Shareholders and associates with limited liability cannot involve themselves in the management of the activity or in the administration of the debtor's property.

Art. 68. - (i) If the debtor does not observe the plan, the administrator or any of the creditors may request liquidation to the court, in writing, without further need to prove debtor's insolvency.

(2) If the court approves such request, the modifications of the debts or rights of interested parties applied in the reorganization plan remain final.

Art. 69. - (1) However, if activity is redressed and there is an increase of the quantum of sums to be distributed to creditors, the court may order an extension of the reorganization period - totally or partially - for maximum one year, appointing a person for the management of the activity.

(2) The creditors, the debtor and the territorial chamber of commerce may appeal, in 15 days, against the decision of the syndic judge allowing continuation of the debtor's activity. In such case, the court shall immediately give a decision, in a hearing that may be attended by any of the interested parties. If the court approves the continuation of the debtor's activity, it can impose restrictions and conditions requested by the creditors or by the debtor.

Art. 70. - The person to whom the management of the debtor's continuing activity was entrusted shall present monthly reports to the syndic judge on the financial situation of the debtor's property. Creditors shall be convoked at the end of every quarter, in order to hear the report and the accounting statement.

Art. 71. - Even after the court's initial decision of continuation of the debtor's activity, creditors may oppose - but at intervals of minimum 60 days - to the continuation of such activity, if it harms the debtor's property. The filing of such opposition does not suspend the continuation of activity, until the court decides upon it.

 

Section 6

Liquidation

 

Art 72. - In cases when the debtor, in the declaration provided in Article 21 paragraph (1) letter f), states its intention of beginning judicial liquidation, as well as in those provided in Article 65 paragraph (2), Article 67 paragraph (1), Article 68 and Article 75 paragraph (3), the provisions of the present section shall apply.

 

§ l. Initial measures

 

Art. 73. - Filing of the debtor's petition, expiration of the appeal term of the debtor against the creditors' petition or rejection of the debtor's appeal against such petition deprive it of its right of administering goods belonging to the debtor's property and of disposing of such goods, if it did not state its reorganization intention, according to the conditions of Article 21 paragraph (1) letter f).

Art. 74. - The syndic judge can conclude, after agreement of the court, compromises or give discharge of debts; he may give up legal action or real securities or he may give discharge to personal guarantors.

Art. 75. - (1) In the absence of a reorganization plan, confirmed by the court according to the conditions of Article 64, the debtor, a creditor, the committee of creditors or the territorial chamber of commerce and industry may petition the court for denying the debtor the right of continuing its activity.

(2) The court shall examine in maximum 15 days such a petition, in a hearing attended by the debtor, the creditors, the syndic judge, the committee of creditors and the territorial chamber of commerce and industry. The petition shall be accepted only if motivated, and the motives include constant loss of the debtor's property or the improbability of implementation of a rational activity plan.

(3) If the petition is accepted, the court shall order without delay the judici al liquidation of the goods belonging to the debtor's property.

Art. 76. - (1) As soon as possible, after filing of the petition of the debtor by which it intends liquidation, the syndic judge shall seal goods belonging to the debtor's property. If the debtor also owns goods in other counties the syndic judge may send notifications to courts of such counties, for the sealing without delay of such goods.

(2) Courts of other counties may seal the debtor's goods from their own initiative, after finding out that such debtor filed a petition stating its intention to liquidate. Documents issued by other courts, certifying that seals were applied, shall be sent to the syndic judge.

Art. 77. - (1) There shall be placed under seal: shops, storehouses, warehouses, offices, commercial correspondence, contracts, merchandise and other inovable assets belonging to the debtor's property.

(2) There shall not be placed under seal:

a) objects that must be sold without delay, in order to avoid their material deterioration or loss of value;

b) accountig records;

c) bills of exchange and other titles of value which are due or will be due shortly, and which shall be taken by the syndic judge in order to obtain cash or to perform requested preservation operations;

d) cash, which the syndic judge shall deposit in a bank, on the account of the debtor's property.

Art. 78. - If the debtor's property may be completely inventoried in one single day, the syndic judge or the administrator by delegation shall proceed to draft such inventory without delay, without applying seals. In all other cases, he shall proceed to draft such inventory as soon as possible. The debtor must be present and assist in the drafting of the inventory, if the syndic judge requests it if it is not attending, it may not refute inventory data.

Art. 79. - (1) The inventory shall describe all goods of the debtor, including those which are not placed under seal, and indicate their approximate value at the time of the inventory. The syndic judge may appoint an expert, at the expense of the debtor's property, in order to assist him in valuating the goods. Such expert nlay be one of the creditors.

(2) The inventory document shall be signed by the syndic judge, by the appointed expert and by the debtor. The syndic judge shall point out to the debtor that its signature on the inventory constitutes an express guarantee that the debtor knows that, during the inventory, no good belonging to its property was omitted.

Art. 80. - (1) During the placement of seals, the syndic judge or, as the case may be, the administrator shall take necessary measures for preservation of the goods.

(2) The syndic judge may sell at any tinle all perishable goods or goods subject to imminent depreciation. Goods that require preservation expenses may be sold with the approval of the committee of creditors or, in case such committee does not exist, with the approval of the meeting of creditors.

(3) The syndic judge may sell important goods belonging to the debtor's property - land, plants, equipment - only with the prior agreement of the meeting of creditors, given by the

majority of those who hold two-thirds of the value of verified debts, and with the court's agreement.

(4) Amounts resulting from such sales shall be deposited in a bank, on the account of the debtor's property.

Art. 81. - (1) The syndic judge must notify the beginning of the procedure, in the shortest possible time, to postoffices, railway stations, warehouses, harbour warehouses and other storage places under the jurisdiction of the place where the debtor has its main business office or subsidiaries or branches, and requests them to send him the debtor's correspondence and any other communications made to him. The syndic judge shall order all banking companies where the debtor has deposits not to use such deposits without an order from him.

(2) If the debtor owns goods subject to transcription, inscription or recording in real estate publicity records, the syndic judge shall send to courts or authorities operating such records a copy of the petition for bankruptcy - stating the debtor's property - in order for a mention to be made.

 

§ 2. Establishing the passive mass

 

Art. 82. - (1) If the information provided by the debtor, accompanying its petition, does not include a proper list of names and addresses of all creditors of the debtor's property, the syndic judge may use, at the expense of the debtor's property, an accounting expert who shall use the balance sheet, the accounting records and the records of the debtor or other data in order to establish a list of creditors. The syndic judge shall try to recover the cost of the services provided by the accounting expert, incurred because the debtor did not provide a proper list of creditors.

(2) The syndic judge shall send to every creditor a notification stating the term for registering debts against the debtor's property and the necessary requirements in order for a registered debt to be deemed valid.

(3) If creditors with their head office or domicile abroad have representatives in Romania, the notification shall be sent to them.

(4) The syndic judge shall request the notary public or the court having jurisdiction over the location in which the debtor has its real property for a list of the obligations burdening such property.

Art. 83. - (1) If the debtor did not fulfill its obligation of submitting appropriate financial information, according to Article 21 paragraph (1) letters b)-d), the syndic judge may, at the expense of the debtor's property, hire an accounting expert, who shall draft lists of the debtor's goods and obligations. The syndic judge shall be entitled to try to recover the cost of the services provided by the accounting expert from the debtor or from natural persons liable for the fact that the debtor did not submit appropriate financial information.

(2) If the financial information submitted by the debtor seems inappropriate, the syndic judge may order its checking by an accounting expert who shall make necessary correction, at the expense of the debtor.

Art. 84. - (1) All debts shall be subject to checking. (2) Debts shall be presented, upon request, in maximum 60 days after the date of sending by the court to the creditors of the first notification of the petition for bankruptcy. Debts shall be filed in a record, which shall be kept at the court's secretariat.

(3) The filing of a petition suspends any prescription, which shall resume its course if the petition was rejected.

(4) All debts recorded at the court's secretariat shall be deemed valid and correct, for as long as the syndic judge, the debtor or a creditor does not refute them, in which case the court shall establish the validity, the value, the priority and securities of debts.

Art. 85. - Any petition shall include the name and surname of the debtor or the name of the company, the domicile or head office, the amont of the debt, the ground of the debt, and a declaration regarding priority rights or securities. Copies of the documents justifying the debt as well as copies of mortgage documents or other security documents shall be annexed to the petition.

Art. 86. - (1) After expiration of the term for recording debts, the syndic judge shall examine, as soon as possible, all recorded debts and documents and may conduct an appropriate investigation in order to establish the legitimacy, the exact value and priority of every debt.

(2) There shall not be checked any debts generated by taxes, duties and criminal or contravention fines, which are due to the state or local budget and subject to specific laws.

Art. 87. - No interest or expense shall be added to unsecured debts or unsecured parts of secured debts, beginning from the date of filing of the petition for bankruptcy.

Art. 88. - Unmature debts and debts under condition at the date of filing of the petition for bankruptcy shall be entitled to participate in the distribution of amounts, to the extent permitted by the present law.

Art. 89. - Unsecured debts or unsecured parts of secured debts, unmature at the date o filing of the petition for bankruptcy, shall be recorded in the debt record at their full value, but any distribution of amounts for such debts shall be effected by reducing them to the value resulting from the application of the general reduction system.

Art. 90. - Debts consisting of obligations that were not calculated in currency or the value of which is subject to modification shall be calculated by the syndic judge and recorded in the debt record at the nominal value of such debts at the date of filing of the petition for bankruptcy. The court shall decide upon any refutation of the calculation effected by the syndic judge for such debts.

Art. 91. - A debt of a creditor with more than one joint debtors shall be recorded in all debt records of debtors at its nominal value, until full repayment. No reduction of the amount of the debt recorded in the debt record shall he performed in any of the debt records of debtors until the creditor is fully repaid, in cash or in kind. If the total amount distributed to the creditor, in all actions with its debtors, exceeds the total amount due, the creditor must return excess amounts, which shall be recorded again as funds in the property of the debtors, in proportion to what every debtor paid in excess of what was due.

Art. 92. - A creditor which, before filing a petition for bankruptcy, received a partial payment for its debt from a joint debtor or a personal guarantor of the debtor, may record its debt only for the part not yet repaitl. A joint debtor or a personal guarantor, entitled to restitution or compensation from the debtor for the amount paid, shall be recorded in the debt record with the amount paid to the creditor.

Art. 93. - As a result of performed checking, the syndic judge shall draft and register with the court a preliminary record of all obligations, showing which debts are unsecured, secured, under condition or with priorities, and indicating if a debt is refuted by him in any manner.

Art 94. - Any creditor of which the debt is refuted by the syndic judge, by another creditor or by the debtor shall be sent a notification stating that a court hearing shall be convened in maximum 30 days from reception of the notification, in order to solve the refutation.

Art. 95. - After solving all debt refutations, the syndic judge shall register with the court and display at the court entrance a record of all debtor's obligations, indicating the amount, the priority and the situation - secured or unsecured - of every debt.

Art. 96. - Until closing of the procedure, the syndic judge or any creditor may refute any debt or priority level of the record of total obligations, based on a fraud or misconduct of the creditor.

Art. 97*. - (1) In all cases of judicial liquidation, upon proposal of the syndic judge, the court may appoint a liquidator. The latter shall be a chartered accountant, an auditor, or shall hold a degree in economic science or in law, and he shall also have 5 years of practical economic or legal experience.


* Article 9 was modified according to Ggovernment Order No. 38/August 28,1996, puhlished in the "Monitorul Oficial" (Official Gazette of Romania), Part I, No. 204/August 30, 1996, as follows:

«Article 97 is completed with paragraph (3), having the following contents:

„(3) Within the banking system, the appointmnet of the liquidators will be made with the compulsory advice of the National Bank of Romania and of Ministry of Finance”.»

(2) The liquidator drafts such documents and performs such operations and procedures as indicated by the syndic judge.

 

§ 3. Performing the liquidation

 

Art. 98. - (1) In all cases of judicial liquidation, the goods belongig to the debtor's property shall be liquidated in the most profitable and rapid manner. If the debtor's commercial activity continued during the procedure, goods utilized for such activity shall be sold at the most appropriate moment, in order to obtain a maximum profit from their sale.

(2) The syndic judge shall send, in maximum 20 days after the court's decision initiating liquidation, to all creditors holding debts representing more than 5% of the value of all debts against the debtor's property, a notification regarding his intention of selling any good whose value exceeds 10% of the value of all debts against the debtor's property. Such notification shall specify if sale is to be performed through auction sale or directly, and shall indicate the price, the term of payment and, if known, the buyer.

(3) The syndic judge may appoint an accounting expert, in order to assist him in valuating the goods and establishing the prices of goods belonging to the debtor's property. The retribution of such expert shall be at the expense of the debtor's property.

Art. 99. - (1) Sale of a fixed asset shall be performed through public auction sale, except for the case when the court, upon request of the syndic judge, authorizes direct sale. A request of the syndic judge for direct sale shall be communicated to all creditors, to all natural or juristic persons holding mortgages or other real securities on such good, as well as to the debtor, and it shall detail the terms of the proposed sale. If any creditor, security holder or the debtor objects to direct sale, the court, 20 days at least after having informed the creditors, security holders and the debtor, by a notification, shall hold a hearing in order to examine the objectiou and give a solution.

(2) The syndic judge must register with the court and communicate to all creditors, to all natural or juristic persons holding mortgages or other real securities on the goods, as well as to the debtor, by a notification, his intention of selling such fixed asset through auction sale, 30 days at least prior to the proposed auction sale date. The notification shall include a detailed description of the fixed asset, the city, the street and number where it is located, or shall identify the asset using the data included in real estate publicity records; it shall also include the auction sale starting price. If any creditor, security holder or the debtor objects to proposed auction sale conditions, the court shall hold a hearing at least 20 days after the objection was notified to all creditors, security holders and to the debtor, in order to examine objections and give a solution.

(3) The syndic judge shall notify every fixed assets auction sale, at least twice, in widely-read local newspapers, and shall order that the auction sale notification be displayed at the court entrance, on the fixed asset that must be sold and in the main hall of the city's local council where the fixed asset is placed. A copy of the notification shall be sent to every creditor holding securities on such fixed asset or to the debtor. The same text shall be published in the "Monitorul Oficial" (Official Gazette of Romania), Part IV.

Art. 100. - Sale may not be effected before 20 days since the last newspaper notification.

Art. 101. - The provisions of the Civil Procedure Code regarding forced execution and concerning fixed assets - by auction sale, adjudication, appeal and adjudication effects shall apply, accordingly, to sales performed by the syndic judge.

Art. 102. - Income realized from administration of buildings or of other goods belonging to the debtor's property shall be deposited in the account of such property and shall be distributed to creditors jointly with the income realized by sale of such goods.

Art. 103. - Amounts obtained by public auction sale shall be deposited in the account of the debtor's property and the receipts shall be entrusted to the syndic judge, who shall distribute them to creditors.

Art. 104. - (1) Creditors holding mortgages or other real securities on the debtor's property may be paid from sale of the goods on which they have securities, payment including the total capital, interests and corresponding expenses. To the extent to which the amounts obtained from sale of such goods are insufficient for full repayment of a secured debt, such creditor shall have starting from that moment, an unsecured debt equal to the amount of capital, interests and expenses due to the creditor at the date of recording of the debt, less the amount obtained by sale of the good and paid to the creditor. If the price does not fully cover creditors' debts, they shall enter into competition with unsecured creditors at the distribution of amounts resulting from the debtor's property buy only for the sums owed to them; they cannot receive corresponding interests, which run from the date of filing of the petition for bankruptcy.

(2) A creditor with a secured debt is entitled to participate in any distribution of amounts, made prior to the sale of the good on which it has a security. Amounts received from such distributions shall be deducted from those that the creditor would be entitled to receive later from the income resulting from sale of the good on which it has a security, if this is necessary in order to prevent such creditor to receive more than he would have in case the good on which it has a security was sold prior to such distribution.

 

§ 4. Distribution of amounts g'enerated by liquidation

 

Art. 105. - Every 6 months, calculated from the date of beginning of the liquidation, the syndic judge shall submit to the court a report regarding the funds obtained by liquidation and cashing of debts, as well as a plan of distribution to creditors. The court may extend the term for presentation of the report and distribution plan. The distribution plan shall be recorded at the courts' secretariat and the syndic judge shall notify this fact to every creditor. A copy of the report and of distribution plan shall be displayed at the court entrance. Any creditor may object to the report, in maximum 10 days after it was displayed. The court shall hold a hearing, 20 days at least after having notified all creditors, in order to examine any objection and give a solution.

Art. 106. - Funds resulting from sale of the debtor's property shall be distributed as follows:

1. for the payment of sale or execution procedure expenses;

2. for repayment of debts - with all corresponding interests and expenses - granted by banking companies during the reorganization period;

3. for the payment of debts bearing mortgages or other real securities over the goods, in the order of priorities;

4. the remainder, according to Article 10 7.

Art. 107. - Debts shall be paid, either according to a reorganization or to a liquidation plan, in the following seduence:

1. fees, stamps and other legal expenses, as well as retribution of persons hired according to Articles 9, 17 and 97;

2. amounts due by the debtor to third parties for food and subsistence for 6 months prior to the beginning of the procedure;

3. if the debtor is a natural person, the means of subsistence for him, his spouse and children, as granted by the court;

4. debts resulting from labour contracts, for a period of 6 months at the most prior to the beginning of the procedure;

5. debts generated by docurnents and commercial operations of the syndic judge or the administrator, as an extended debt on the account of the debtor's property;

6. administrative expenses, including:

a) present and necessary expenses for preservation of the debtor's property and utilization of such, including all administration fees and expenses;

b) debts resulting from the continuation of the debtor's commercial activity;

7. unsecured debts;

8. debts of shareholders and associates.

Art. 108. - The following debts shall be entitled to participate in the distribution, either according to a reorganization or to a liquidation plan, only after full payment of all unsecured debts:

1. debts resulting from credits granted to a trading company by a shareholder or an associate, member in such cornpany;

2. debts resulting from gratuitous acts.

Art. 109. - The amounts to be distributed among creditors with the same rank of priority shall be given in proportion to the amount allocated for each debt in the record mentioned in Article 95.

Art. 110. - Creditors of which the debts were presented late, but not later than the closing of the liquidation, shall participate in the distribution proportionally, but only for amounts possibly remaining after the repayment of debts registered in due term.

Art. 111. - In case the goods that constituie the property of a geueral partnership company or limited partnership company are insufficient for repayment of registered and checked debts against the company, the syndic judge may proceed to forced execution against the associates with unlimited liability.

Art. 112. - On the occasion of partial distribution, the following amounts shall be specified:

1. proportional amounts due to creditors whose debts are subject to a condition not yet fulfilled;

2. proportional amounts due to the owners of promissory notes or bearer's notes and which hold the original of such titles, but did not present them;

3. reserves intended to cover future expenses of the debtor's property.

Art. 113. - For creditors with debts recorded in the debt record, and to which only partial amounts were allocated, or with debts under condition and which participated in the distribution, due amounts shall be kept in a bank, in a special deposit account, until their status is clarified.

Art. 114. - (1) After the goods belonging to the debtor's property are liquidated and all refutations regarding debts solved, the syndic judge shall submit to the court a final report together with a general balance sheet; copies of such shall be communicated to all creditors and to the debtor. A copy of the final report and a copy of the general balance sheet shall be displayed at the court entrance. Any creditor of the debtor may object to the final report in maximum 10 days after the date it was displayed. 20 days at least after having notified all creditors and the debtor, the court shall hold a hearing in order to examine the final report and the objections, in view to approve such.

(2) Debts that, at the date of the registration of the final report, are still under condition shall not participate in the distribution.

Art. 115. - After the court has approved the final report of the syndic judge, the latter shall proceed without delay to the final distribution of all funds of the debtor's property. Funds remained unclaimed, for 90 days, by the persons entitled to them, shall be deposited by the syndic judge in a bank account, on the account of the debtor's property, and the bank statement shall be presented to the court.

§ 5. Closing of the liquidation

 

Art. 116. - (1) A judicial liquidation procedure shall be cleemed closed when the court approved the final rehort, all funds or goods of the debtor's property were distributed and unclaimed funds were deposited in a bank. Following a request from the syndic judge, the count shall issue a decision for closing the procedure. The decision shall be communicated in writing to all creditors, to the debtor and to the territorial chamber of commerce and industry.

(2) A reorganization or judicial liquidation procedure, according to a plan, shall be deemed closed after completion of a confirmed plan or at the reduest of the person who proposed it. If a procedure starts as a reorganization but later becomes a liquidation, it shall be closed according to paragraph (1).

 

Section 7

Closing of the procedure

 

Art. 117. - At any stage of the procedure, the court may issue a decision for closing the procedure, at the request of the syndic judge, if it finds that there are no goods or that existing goods are insufficient to cover administrative expenses and that no creditor agrees to advance such amounts.

Art. 118. - The court shall issue a decision for closing the procedure, at the request of the syndic judge, even before goods of the debtor's property are entirely liquidated, in case debts were fully repaid by performed distributions.

Art. 119. - If, after expiration of the term for filing petitions regarding debts, the syndic judge announces that no creditor filed any petition, the court shall issue a decision for closing the procedure.

Art. 120. - Any creditor may object to the request of the syndic judge regarding the decision for closing the procedure. 20 days at least after having notified all creditors, the debtor and the territorial chamber of commerce and industry, the court shall hold a hearing in order to examine the request and the objections and to give a solution.

Art. 121. - When a procedure is closed the syndic judge and all person assisting him shall be deemed discharged of any duties or liabilities regarding procedure, property, debtor, holders of securities, creditors, shareholders and associates.

Art. 122. - By closing of procedure, the debtor shall be discharged of obligations it had prior to the filing of its petition or expiration of its appeal term against the creditors' petition, or after rejection of its appeal against such petition; however, if the debtor is found guilty of fraudulent bankruptcy or fraudulent payments or transfere before the above dates, it shall not be discharged of such obligations unless they were paid during the procedure.

 

CHAPTER IV

Liability of managing bodies members

 

Art. 123. - (1) The court may order that a part of liabilities of a joint-stock company or limited liability company which is in a situation of payment cessation be borne by the members of the managing bodies - administrators, directors, auditors - who contributed to generate such a situation for the company by one of the following actions:

a) they used company goods or credits for personal benefit or for the benefit of another company;

b) they performed commercial acts for their personal benefit, under the cover of the company;

c) they ordered the continuation of an activity clearly leading the company to payment cessation, for their personal benefit;

d) they kept a fictional accounting, they made some accounting documents disappear or they did not keep the accounting according to the law;

e) they misused or hid part of the company's assets or increased its liabilities in a fictional manner;

f) they used ruining means in order to obtain fonds for the company, in view to delay the payment cessation;

g) in the month prior to payment cessation, they paid or ordered payment to a preferential creditor, to the disadvantage of others.

(2) The alaplication of paragraph (1) provisions do not prevent the application of criminal law, for deeds that constitute offenses.

Art. 124. - Amounts deposited according to Article 123 paragraph (1) shall become the property of the debtor and shall be used, in case of reorganization, to supplement the funds necessary for continuation of the debtor's activity, and, in case of liquidation, to repay debts.

Art. 125. - For the application of measures provided in Article 123, the court may be petitioned by the syndic judge, by any of the creditors, by the territorial chamber of commerce and industry, or it may petition itself, according to the data available in the file, deciding insurance measures.

Art. 126. - Forced execution against persons provided in Article 123 paragraph (1) takes place according to the Civil Procedure Code.

 

CHAPTER V

Final and transitory provisions

 

Art. 127. - The provisions of the present law are supplemented, if compatible, by those of the Civil Procedure Code.

Art. 128. - The exercise of actions or, as the case may be, procedures, provided in the present law are suspended for debtors - trading companies with a majority state capital that the Government subjected or will subject to special financial supervision procedures, for the period of application of such procedures.

Art. 129. - The procedure applied to self-managed public companies for insolvency shall be established by law, according to the general regime of public property.

Art 130. - (1) The present law comes into force at the date of its publication in the Official Gazette of Romania and becomes applicable 60 days after its coming into force.

(2) At the date of application of the present law, the following provisions are abrogated:

- Articles 695-888 (Book III - Regarding bankruptcy) and Articles 936-944 (Special procedure provisions regarding bankruptcy) of the Romanian Commercial Code;

- Articles 34-38 (Provisions regarding bankruptcy) of the Rules for application of the Romanian Commercial Code, published in the "Monitorul Oficial" (Official Gazette of Romania), No. 126 of September 10, 1887.

Art. 131. - Bankruptcy procedures opened until the date of application of the present law shall continue to be administered and liquidated according to the provisions of the Romanian Commercial Code.

 

 

* The Law No. 64/June 22,1995 - Law on the proceclure of reorganization and judicial liquidation – was puhlished in the "Monitorul Oficial" (Official Gazette of Romania), Part. I, No. 130, June 29, 1995.

 

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