The new draft bill, by the Ministry of Regional Development and Competitiveness, introduces substantial changes in the pre-bankruptcy procedure of Articles 99-106 of the Bankruptcy Code, as the existing legal framework of companies’ reorganization did not bring the desired results.
The main changes are the following:
– Introduction of the commitment of “non-concenting creditors’ commitment”, as it was already envisaged in the Art.44, L.1892/1990. The process of conciliation in the current status creates among others the so-called “issue of collective action”, according to which the agreement resulting from this process is not binding to the non-concenting creditors. The above option of binding the non-concenting creditors solves the aforementioned issue aiming to increase the cases of real reorganization.
– Failure to comply with the provisions of the agreement will not constitute reason for its automatic cancellation, since it is provided that both parties will have the right to address non-compliance, as a reason for its termination or as a resolutive condition.
– The debtors, who are in cessation of payments, will be now allowed to apply for reorganization process, by taking into consideration that the pre-bankruptcy procedure can lead to better results than bankruptcy. Thus, in case of application for the reorganization process, the bankruptcy petition will be suspended.
– The acceleration of the reorganization process is considered as a catalytic factor in order to increase the likelihood of companies’ consolidation. Therefore, the Court will be entitled to adjust the process to the needs and the peculiarities of the case. The consent of the majority of shareholders of the debtor is not required anymore in order to achieve an agreement with creditors. Thus, the Court is able to substitute the consent of the shareholders, who are not involved, abusively, in the reorganization agreement, whereas it is entitled instead of rejecting the application, to request explanations or the amendment of the agreement, in order to save the company.
– In order to prevent an abusive behavior from the shareholders, the bankruptcy Court is allowed to intervene and force them to join the reorganization procedure.
– In cases, where the agreement refers to the transmission of the company to a third person, the new owner has the option to choose whether he/she wants to assume part of the debts of the company.
– The suspension of civil prosecutions will not be an automatic consequence of the reorganization procedure.
Finally, when the bill will be implemented, the companies, whose applications are pending, will be given the opportunity to choose between the old and new provisions.
Edited by Natassa Kollia