Insolvency Law amended by emergency ordinance. FinMin: The economic environment will be cleaner. Realitatea TV claims it is main target

The Government has adopted on Thursday an emergency ordinance to amend the Insolvency Law, Finance Minister Eugen Teodorovici said, arguing the economic environment will be cleaner and abusive practices will be stopped, as well as consequent insolvencies.

The GEO provides for the conversion of companies’ debts into shares. The state will take possession of the shares for the amount of debt the company has to the budget, ziare.com informs.

“We will clean up the economic environment, this is the most important issue, not that the state recovers the money,” Minister Teodorovici said.

The Finance Minister said 6,000 companies are currently under insolvency procedures, their budget arrears amount to over RON 63 billion.

“Currently, more than 6,000 companies and about 64,000 employees are under insolvency procedures or under surveillance. The arrears to the budget of these companies amount to over RON 63 billion, the recovery degree being of 6%. These figures refer to private companies, not the state companies. Urgent measures are needed to allow the conversion, decrease or the assignment of receivables, in certain conditions, in order to avoid the bankruptcy of some companies still having recovering potential and to avoid serious economic and social consequences,” Minister Teodorovici said.

He added that the National Agency for Fiscal Administration (ANAF) will suggest ways to turn the receivables into shares, based on certain transparent criteria and formula.

The finance official said the amendments to the insolvency law aim at avoiding bankruptcy for many companies having recovering potential.

“The state had many legal instruments, which, if implemented, would have reduced the number of companies filing for insolvency. Furthermore, the state could have suggested, in case of void legislation, certain legal provisions to put an end to practices such as paying to the state only the fines,” Teodorovici said.

In turn, Justice Minister Tudorel Toader said the Justice Ministry is co-initiator of the law. “The issue of insolvency falls under the ministry’s task, as legal initiative. The ministry has assessed the issues of legality and considers the constitutional demands and exigencies are met,” Toader said.

In August, Prime Minister’s economic adviser, Darius Valcov, announced that the Government was working on a draft ordinance regarding the tightening of legislation for insolvency.

Tough criticism from practitioners, liberal professions’ representatives – the amendments violate the Constitution

The National Union of Insolvency Practitioners in Romania (UNPIR) announced that the draft Emergency Ordinance amending the Insolvency Law launched by the Ministry of Public Finance violates the provisions of the Constitution and jeopardizes the jobs of 200,000 employees.

“The inclusion of an alternative threshold for filing the application for insolvency, if there are budgetary receivables, is constitutionally discriminatory, creates negative economic effects on the participants in the procedure, suppliers, and will cut the budget revenues,” states an UNPIR press release.

The Union of Liberal Professions in Romania (UPLR) has also drawn attention that the draft GEO aiming at amending and completing some normative acts, mainly aimed at amending the Insolvency Law (Law 85/2014), contains rules that will lead to the blocking of the insolvency procedures.

Realitatea TV claims the amendments aim to shut down the TV station

Realitatea TV private broadcaster claims the draft emergency ordinance aims at shutting it down, as main opponent to the Government policies and of the PSD.

“This insolvency law has as its sole object the shutting down and the bankruptcy of Realitatea TV. The law directly targets Realitatea TV, does not have the connection with the insolvency in Romania, as they wanted, by some illegal methods, by an ordinance, to directly target Realitatea TV. I do not want anyone to worry, we still fight,” said Cozmin Guşa, Realitatea TV shareholder.

On September 7, 2011, Mariana Moncea, syndic judge with the Bucharest Court admitted the debtor’s request and ordered the opening of the general insolvency proceedings against Realitatea Media, the holder of the audiovisual licenses for Realitatea TV and Realitatea FM.

According to the ANAF website, the owners of Realitatea TV and Realitatea FM recorded on June 30, 2017 outstanding debts to the state budgets totaling almost EUR 24 million (RON 109.4 million), amount broken down as follows:

• to the state budget – EUR 9.4 million (RON 43.4 million)
• to the State Social Insurance Budget – EUR 10.1 million (RON 46.6 million)
• to the unemployment insurance budget – EUR 430,000 (RON 2 million)
• to the health insurance budget – EUR 3.8 million (RON 17.3 million)

According to the company’s balance sheets, the losses in 2015 and 2016 stabilized at around EUR 1.8 million (RON 8.5 million) for the company having almost 220 employees.

The majority shareholder of Realitatea Media is Strategies Research Investments (86.5%), a company equally owned by Cozmin Guşa and Maricel Păcuraru.