PREVENTIVE AGREEMENT – THE VIABLE ALTERNATIVE TO LAW NO. 85/2006 ON INSOLVENCY PROCEDURE?

• Main Author: PAULINA DINA
• Format: Article
• Language: English
• Published: Nicolae Titulescu University Publishing House 2011-04-01
• Series: Challenges of the Knowledge Society
• Subjects: preventive agreement; ad-hoc mandate; insolvency procedure; judicial moratorium
• Online Access: http://cks.univnt.ro/uploads/cks_2011_articles/index.php?dir=01_law%2F&download=cks_2011_law_art_029.pdf

Given the economic crisis that Romania is going through and which influenced in a negative manner the activity of economic agents throughout the country, Law no. 381/2009 has been adopted for the implementation of the preventive agreement and ad-hoc mandate, in order to support companies facing economic difficulties in their activity. Law no. 381/2009 became applicable on January 13, 2010 and it implements, as an alternative to the difficult and time-consuming procedure of insolvency, a contractual mechanism for companies facing difficulties in organizing their activities, outside the insolvency procedure, with limited involvement from the court. This regulation is seen as a solution against the opening of the insolvency procedure. The solution applies especially to small and middle sized companies. The preventive agreement implies a longer deadline for payment liabilities based on a friendly agreement with the creditors. It is a mechanism for avoiding insolvency and it consists of an agreement made between the debtor and the creditors regarding the way in which the debtor, which is in a difficult financial position, will pay all its outstanding debts. The law applies to all legal entities which reorganize a company going through a difficult financial period, without being in insolvency and which are called debtors. Nevertheless, the preventive agreement law still forces us to relate to the notion of insolvency.