Romanian Senate Approves Personal Insolvency Law

The law states that the insolvency procedure instated in accordance with this normative act aims to cover debts against the loan contractor, adding that, in case of personal bankruptcy, the assets of the loan contractor will be liquidated in view of covering the debt.

The insolvency procedure is initiated at the request of the loan contractor who, with the request, willingly admits a state of insolvency. Also, insolvency procedures can be initiated at the request of the lender.

According to an amendment enacted by the senators, the opening of insolvency procedures for individuals, as well as the other processes and procedures involved, falls under the jurisdiction of the court within the area of the loan contractor's residence.

According to the draft law, the contractor who willingly requested and accepted the initiation of insolvency procedures can be completely or partially relieved of debts registered before or after the initiation of the procedure, if the contractor's assets are insufficient to pay the entire debt and if the court grants the contractor the benefit of excusability.

The law also establishes that the forthcoming debtor who, by plan or by early repayment, has covered at least 75% of the overall value of debts, will benefit from the early closure of the procedure and removal from all publicity registries and public registries of legal consequences entailed by insolvency.

The legislative proposal, as enacted by the Senators, states that the insolvency procedure can target incapacitated individuals or people with reduced capacity, found in a state of insolvency declared by the court.

The document also stipulates that personal bankruptcy can target individuals who run companies undergoing insolvency procedures, as well as individuals who fraudulently intervened in the affairs of a company.

The Senate, as first Chamber notified, passed the draft law with 76 pros and three cons.

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