INITIATION OF INSOLVENCY PROCEEDINGS AND ITS EFFECTS IN ROMANIAN LAW

Under Romanian law, insolvency shall be initiated at the request of the persons entitled, usually the debtor or the creditor. After checking the fulfilment of the legal conditions, the syndic judge will order the opening of insolvency proceedings as well as the measures to be taken to know precisely the financial situation of the debtor, the causes that led to the situation of insolvency and the way forward, i.e. the general or simplified procedure. The judicial administrator draws up a report based on which the syndic judge shall decide either the continuation of the general procedure in order to observe the chances of recovery of the debtor on the basis of a reorganization plan or the transition to the simplified procedure: the bankruptcy procedure. In the first case – that of the general procedure – a reorganization plan will be applied, leading to the improvement of the debtor's activity and the payment of the debts to its creditors; in the second case, there are some steps that will lead to the liquidation of the debtor's estate to cover the claims of the creditors. Without claiming to analyses the topic extensively, the article aims to underline the most important aspects about entering the insolvency procedure.