GUtANA Corporation

PHASE 111 FINAL REPORT

Contract Ns EPE-1-01-95-00069-08

submldted by CARANA Csrporat~or

August 25,1998

I 4 3 5 0 North Fairfax 111 ~ c e 5uite 500 Arlington VA 22203 USA

Final Project Report Bankruptcy Reform Project Romanla CEE Phase I l l December July 1998

For Phase III of CARANA's CEE Bankruptcy Project, the focused and staffing changed CARANA is now exclusively engaged in Romania, wlth a long term resident on the ground providing a permanent presence Outlined below is a brief overview of our accomplishments for this year

1 Training Seminars In 1998, CARANA conducted training for the following people court clerks, administrative receivers, syndic judges, and liquidators Each of these multi-day seminars exceeded the number of people to be trained as stipulated in USAID7s task order, included pro-bono labor, and involved Romanian professionals as speakers Each sermnar was conducted in a different city

Site Visitation In addition to formal, multi-day seminars, Milo Stevanovich, the Resident Advisor, visited seven major Romaman cities to meet w~ th more than 50 syndic judges in those cities Discussions on the following included Law 64Emergency Ordinance 58 and legal and technical issues, practical problems and issues faced by syndlc judges, large case administration (particularly Dacia Felix), and other issues

Syndic Judge Survey CARANA conducted a survey of syndlc judges' opinions on the hnction of the bankruptcy system and Law 64 The survey had a good response rate, and showed that a majority of the judges support the Romanian Bankruptcy Institute's proposed alternative amendments

Drafting Ass~stance CARANA worked closely with the Romanian Mlmstry of Justice on many issues pertaimng to bankruptcy Our activities included analyzing and consultmg with the Ministry of Justice on existing and proposed bankruptcy laws, including Law 6411995 and Emergency Ordinance No %/I997

Statistics CARANA examined and analyzed the basic bankruptcy statistics gathered by the Minlstry of Justice

Shadowing CARANA's Resident Advisor conducted shadowing of six syndic judges In their chambers and in court

Other Collateral Law - CARANA has investigated and rev~ewed the structure and operation of the present law Video Production - In an effort to provide quality second-generation knowledge transfer withn the bankruptcy community, CARANA 1s in the process of finallung video tapes of our conferences and sermnars

Fmal Project Report Bankruptcy Reform Project Romanla

Statement of project results and deirverables accomplrshed

I Trarnrnq Sernrnars

Conducted tralnlng ot Court Clerks Admrnlstratlve Rece~versiTrustees Svndlc Judges L~quidators

Court Clerk Semmars Hotel Continental S lb~u Januarv 19-2 1 1999

Tralized 23 Court Clerks tramed (deliverable requirement 70)

Fflczdtv Jetf i p p e ~ s o n Clerb ot Court b S D~srnct Court W D Kentucky Bob h ~ l e y Clerk ot Court U S Bankruptcv Court E D Vngmia

Topics Standaldized F o ~ m Development and Lse Court Admm~strat~on Case Management and Cash flow Procedures Calendar Management Records Management Estate (Debtor Property) 4drmn1stration Clams Processmg Court Record Access Case Statlsncs Gathermg

4rlrlztzonal Court clei k trnrnrng delnered ro clerks dza rng Resrdent 4dcrsor szte vzsziatrons rn C l y Brasov lasr Crazova Consraizta T~mrsonra for clerks who dzd not attend rhe seminar zn Srbztr

Cornrnents The three day conference covered the most significant areas of bankruptcy case processing Standardized bankmptcv forms developed by the clerks and facultv dunng the semnar were submitted to the hfmistrv of Justice for evaluation and once approved tor mandatory use by all judets as requlred bankruptcy documents

Adm~n~strat~ve Recewer Sem~nars Palace Hotel S~naia April 22 24 1998

Trazned 20 Admmlstrative Recewers named (deliverable requirement 13)

Faculty Amanda Robertson- Coopers & Lvbrand Stuart Jones - Coopers & Lybrand Proiessor Ion G Turcu Judge Court of Appeals -Cluj and Professor of Law Babes-Bolyai Univers~ty W~lliam Phelps - Project Manager Pnvatlzation Operations Center Carana Corporation

T O ~ C S Introducnon and Busmess Valuat~on - Amanda Robertson Stuart Jones Legal frame work tor Bankruptcy Adrmnistrators - Ion G Turcu Problems and Issues m the role of an Admuustrator - W~lliam Phelps

Benefir~ Three dav conference covered I S h o u s of classroom time Also In attendance were representanves from the Mvnistrv of Reform Roman~an Badmptcv Inst~tute and Romanian Chamber of Commerce

Svndic Judqe Seminars Hotel Evlangalia Mangal~a Llay 19 X - 1998

Tt nrr~ed 34 currently sltting synd~c judges (Dehverable required 43)

Fczcult~ Judge Edita Lovin - Pres~dent RBI Judge 4ppellate Court Craiova Judge ion Gcolgiu V ~ c e President Tr~bunal Court - Cluj Stephen J Tavlor Coopers & Lybrand UK Amanda Robertson Coopers Sc Lvbrand UK Stuart Jones - Coopels R Lvbrand UK Nicolar: C m u CECCAR (Romanian Accountmg Institute) Ma~iana Pro1 - CECC 4R (Romanian 4cco~1ntmg Institute) Judge Challes C ~ s e U S Bankruptcy Court Judge Frank Coniad- U S Bankruptcy Court Sergiu Coroiu -Independent L~quidator

Top2 cs Judge Edita Lovm Law 64 Overv~ew Judge Ion Georgiu Large Case AdmmistratiodDac~a Felix Evpenences Stephen J Taylor 4drmnistranve Receiver s Issues Amanda RobertsonJStuart Jones Valuation Issues Judge Charles Case! Judge Franh Coruad Reorganization Plan Evaluation U ~ ~ o l a e Craiw Mai~ana Pirol F ~ n a n ~ ~ a l Analvsis tor Syndic Judges Serglu Coroiu L ~ q u ~ d a t ~ o n Issues

Cornrnents Particlpann ne ie cur~entlv sitting svndlc judges lepresenung 34 out ot 41 judets h e believe we hake tramed over 30% ot all sitt~ng Roman~an Svndic Judges at this time There were 3 Y full days of material with no less than 10 faculty trom the U S the U K and Romania In attendance were representatwes from the Vm~stry of Justice Roman~an Bankruptcy Institute CECCAR (Romanian Accounting Institute) and Romanian Chamber of Commerce The sermnar matenals are packed with substantwe content and are the most useful matenals produced by our project thus far The books are intended to serve as a permanent matenal set to accompany our v~deotapes

L~quldator Semmars D~plomatic Club Bu~harest June 18 19 1998

Tra z n ecl 30 Romanlan l~quldators (Delwerable Requirement 25)

Faculty M ~ l o Stevanov~ch - Resldent Adv~sor Carana Corporation Inna Constantmescu- Coopers & Lvbrand Bucharest Speranta Munteanu - Coopers & Lybrand Bucharest Simon KelIeway - Coopers & Lybrand Bucharest

Top1 cs Law 3 111990 - overvlew 1 comparison Milo Stevanovlch (Carana Corporation) L~qu~dat ion - practical steps I m a Constantmescu I Simon Kelleway (Coopers 6: Lybrand) L~quldation - problems and practlcal lssues Inna Constantmescu I S ~ m o n Kelleway (Coopers 6: Lybrand) Liquldatlon - case studies Speranta Munteanu I S ~ m o n Kelleway (Coopers & Lybrand)

Comrnrnt~ The seminar included a practlcal Lase study where partuxpants had to formulate a l~quidation pnonty pavment plan In attendance were lepresentatwes from the Mmistrv of Just~ce lMinmry of F~nance Romanian Bankruptcv Insntute CECCAR (Romanlan Accounting Institute)

Durmg the program period the Resldent Advisor vlsited w ~ t h svndlc judges In seven major cltles In Romania representug the largest centers ot ~ornrnerc~al actlvlty Cluj Brasov I a s ~ Cralova Constanta Ttmisoara as well as Bucharest

Cluj Februaiv 1 1 13 Cluj March 16-17 Brasov February 16- 18 Craiova March 2 J

T~misoara Maich 1 1 1: Iasl M a ~ c h 73 27 Constanta April 2 3

Durmg these \ isits the Resldent Adv~sol conducted face to tace meetmgs wtth the svndlc judges The top~cs covered lncluded the following

\ Law 64lEmerg Ord 28 legal and technical lssues -non judicial tasks/adminlstratwe burden on judges -mabtllty to authorize an admu~strator -1nablllty to reject contiacts in reorganlzatlon amblguitv on the treatment of state budgetary claims

-1nsuific1ent legal guidelines on how to hlre administrator -uncelTaln lole and iesponslb~llty ot admistrator -avo~dance powers now lmuted to liquidation (Bankruptcy) --contract lejectlon powel lirmted to llqu~dat~on (Bankruptcv) -ambiguous treatment ot secured clalms

- state power to supersede securlty ~nterests,highest prlonty to state clams (potential to subsume all unsecured clams effechvely voids Law 64) - lack of judmal authorltv to erdorce debtor cooperahon -other

B D~scussed prachcal problems and lssues of bemg a syndic judge -lack financlalibusuess evperlence lack of specialization

-1nab1llty to find qualified euperts/admistrators -inability to fund an adrninlstrator

-lack ot debtor compliance and enforcement powers -evcessive non judlcial tasks/adrmnistratlve burden -1nab1lity to authorize an admuistrator

- mabllity to obtain funds requlred to file adversary actlon - case file handlug and court admmstration

difficultv m communication wlth banks -lack of credltor cooperation -other

C Discussed spec~fic sltuatlons and problems encountered Note Very tew expressed lssues Possible reasons for t h s reluctance -unw~llmgness to admt problems m front of peers In front of others lack of case experience based on lnsufficlent case history (Law 64 is only 2 112 veals old privatlzatlonjust gettmg started) -lack ot large or complex reorganlzatlon cases where such problems tend to anse

D r ~ c w s ~ o n ~ w t h J d g ~ G L O ~ ~ I L I I egm dlng ~ y - 1 rence w th D a m Fdrr (tletmlecl below) v~elcl~rl rlx o d v 1 rcrl pi ohltrn & du t ron thniogue

D D~scussed practical issues large case admmistration/Dacla Fellv Bank with Judge Georgiu -using the debtors managers how and whv tncreaslng le>enue (Short term dlrect loans at 170% mterest)

-sale ot special market assets (precious stones) -lease vs buy decisions on several locations (busmess decisions)

-adrninlstratwe convenlenLe class (270 000 ~redl tols at beglnnlng ot case 240 000 small clalms) (small ~ l a l m s p a d out to eliminate admin burden) natlonal bank as credltor issues and problems tramng issues/ava~lab~litv

- new banking legislation-effect on law 64 appllcabllitv to Banks mega ~aseihigh v olume court adnilnlstratlon particlparlon as tacuitv at Syndic Judge Tralning Semlnar other

E Discussed other Issues of concern role hnctlon and focus of USALD/Carana banknrptcv project byndlc judge tmnlng and curriculum needs

-seminar content and structure statistical repomng (pertormed reconciliation oi 1997 act~vltv) role and tunction ot the Romanian Bankwptcy Institute

-survey bv Mimstry ot Justlce on syndlc judges views -LOUIT clerk tralnlng materials (standardized forms and statlstlcs nammg) -large case high-volume pleparedness Issues (caoaclrv to handle mega-cases) -court automation othel

Speclfic judges v~sited bv ad5lsor

BUCHAREST

BRASOV

CRAIOVA

CLUJ

hronel la Flolescu Llihai Oprescu \Iar~a Uavala Aulel Xvranl

Burdea Glieorghe Varceoroveanu Teodora Feteanu Laura Popa Rodlca Llgia Valcu Grlgorlas Doma Comsa Gabnela

Clrstea Petre Tra~staru Glgi Dadalau Virgil Moleanu Ecarenna Birda Marian Epure L i g ~ a Nit01 Tudora Tandaleanu U~coleta Lovin Edita

Ioan Georgm Ioan Turcu Isal~a Mariana Blehar Lucla Barna Delia Mora Ioan Pop Valentin Zarab Carol Gheta Eleonora Fdlp Rodlca Mhte Georgeta Pop Eva

Radu Romascanu Anca Ghldeanu

TI\IISOARA

CONST ANTA

Catalrna Cotoml Vrorel T r o n

Auiel LIrhalaescu G l ~ e o r ~ e Obelste~escu Ioan Ionescu Adr Ian C~ac~unescu Romulus Plohs Dlnca Ioan

Iacob Ioana Gel1 El01 Guranda M~haela Gallea Wllhaela Tlta Vas~lica Badulescu LIariana blaua ApostoL Monlca L enottl Ma1 rn \, olcu

Ill S v n d ~ c Judqe Survev

Resrdent Xdv~sor asslsted the Lllnlstry ot Justlce In preparmg and collecting responses to a survey of syndic judges m all 41 Romanian judets regarding therr oplnlons on the functlon or the bankruptcy svstem as well as on Law 6411995 the recentlv Issued (but not yet rat~fied) Ernelgencv Ordrnance Uo >S/1997 and on the proposed alternatlve amendments offered by the Romanian Banknlptcv Institute The surve has two Lomponents Sectzon i lnvolves a short questlon and answer sunev on the tunctlon ot the ~ 0 ~ 1 t h the judges brew tonard hwher lolz and other aspects of system function Sectzon I f sets forth the text of the applicable starute or amendment and requres the pamcipant to select whlch optlon is most preferable Space was prov~ded for the participant to comment

The survev was distributed m mid 4pnl 1998 36 out oi 41 judets responded (certam judets issued mole than one iesponse) A total ot 63 responses were recewed

As oi this wnting the lesult ot Sectzon II (regarding Law 64 and amendments) has been completed M~nrstrv ofJztstzce Survev Results- Sectlon iI IS attached as Appendiv 4 to this report The Mlnistrv of Justice 1s In the process of rev~ewrng Sectzon I The entlre survey wlll be complete upon dellvery of thls section 4ntzcrpated date August 21 1998

Conclus~on The survev overall Indicates that the particlpamg judges ovenvhelmngly support the Romanian Bankruptcy Insnnxe s proposed alternatlve amendments bv an aberage of over SO% The actual tabulated results are dmlayed below

I MINISTRY OF JUSTICE I ( BANKRUPTCY SURVEY RESULTS I

Sectlon I I

ARTICLE

I I I I

ARTICLE NO 3 I I

NO 2 Total

50 100%

I

DlsagreelD 0 1

2% # Yo

Total 61

100%

Law 58 10

20%

Law 64 1

2%

D~sagreeID 0 3

4 92%

R B I 38

76%

R B I 56

91 80% # %

Law 64 0

0%

Law 58 3

4 92%

ARTICLE NO 8

Law 64 DlsagreeiD 0 Total

84 38% 3 13% 100%

ARTICLE NO 10

I I I 1 ' ARTICLE NO 25 + 26 1

ARTICLE NO 25

Law 64 R B I I Disagree~D 0 I Total

L

# ?6

Total 64

100% # %

ARTICLE NO 27

D~sagree'D 0 1

1 56O6

ARTICLE NO 28

Total 64

100% # O/o

t 1

Law 64 3

4 69'6

Total 64

100%

Law 64 0

0%

ARTICLE NO 29

Law 64

1

R B I 60

93 75%

R B I ( DisagreelD 0 I Total

Law 64

I ARTICLE NO 44 I I I I 1

R B I 64

100%

D~sagreelD 0 2

3 13%

Law 64 3

4 68%

4 76% 1 100% % 1 0%

R B I ] DtsagreelD 0 I Total

I I I

D~sagreelD 0 0

0%

R B I 59

92 20%

# I 0

ARTICLE NO 30

95 24%

% I 1 56%

60 I 3 1 63

# I 1 I 6 1

J

2 1 64 95 31% 3 13% 1 100%

ARTICLE NO 38

Total 63

100% # Yo ARTICLE NO 46

Total 64

100% # %

Law 64 0

0%

Law 64 0

0 O/o

Law 58 3

4 76%

Law 58 6

9 38%

R B I 59

93 65%

D~sagreeiD 0 1

1 59%

R B I 57

89 06%

DlsagreeID 0 1

1 56%

I I ARTICLE NO 62 I I I

ARTICLE NO 60

Law 64 R B I I DlsagreeID 0 1 Total

3 Yo

I 1 I

% ( 1 59% I 95 24'10 3 17% 1 100%

ARTICLE NO 86

I I I I I

ARTICLE NO 69

Law 64 0

0%

Law 64

ARTICLE NO 67, LINE NO 3

R B I I D~sagreeID 0 I Total

# %

Law 58 4

6 3596

# Yo

#I 1 1 I 60 I 2 1 63

1

ARTICLE NO 107

# Yo

R B I 57

90 48%

Law 64 2

3 13%

D~sagreelD 0 1 Total 2 1 63

3 17% 1 100%

Law 64 0

0%

R B I 61

95 31%

D~sagreeID 0 1

1 56%

Law 64 5

8 20°/0

Law 58 4

6 90%

R B I 54

93 10%

Total 64

100%

Law 58 3

4 92%

D~sagreeID 0 0

0%

Total 58

100%

R B I 52

85 25%

DisagreeID 0 0

0 00%

Total 6 1

100%

Some of the more sallent features ot the Romanlan Bankruptcy Inst~tute s proposed amendments Include

Q Art 17 The syndic judge has the power to appoint an administrator who w l l be designated by the Tribunal on recommendation ot the ~iedltors board

Q -\lt -8 The convel ance recoverv sectlons will now be applicable in both ieoiganizations and liquidations

-\it 46 The byndlc judge can maintain or leject contracts In both reorganizations and liquidations

4rt 106 Tile plovlslon allowing tor the palallel treatment ot government budgetary receivables and taxes potentlallv oveln helmmg the entire reorganization and Lomprornlslng secured creditors rights IS abrogated

In depth anah sls ot Law 6-4/1993 Emergencv Ordlnance No 81199- and other related laws and legslat~on (mcludmg Law 3 11 1990 legalding admlnistratlve liquldatlon and recent drafts of the proposed collateral law)

Consultat~ons wlth the Romanlan M~nistrv ot Justice regarding evisting and proposed bankruptcy laws related commercial legislacion and amendments thereto ( including a one on one rneetmg wlth the pnmarv architect or Emergency Ordlnance 3811997 V r Anton Capriel)

S ~ t e vwtations and discussions w ~ t h Romanian syndlc judges concernmg the tunctionmg oi banhruptcv system and Issues of concern regardmg Romanian bankruptcv laws (As Indicated above Res~dent Advlsor met with over 20 judges during site vlsitatlons)

Discussions with leadmg Romannn commercial law and lnsolvencv scholars (mcluding Protessor Sonn David and Professor Ioan Turcu)

Consultations wlth the Romanian Bankruptcv Institute and analysis of the positlon paper (proposed alternanve amendments)

Analys~s ot new legislation governmg bank bankruptcies

Analysls of EU and other ~nteinational msolvency protocols and model cross-border msolvency statutes for consistencv wlth international and EU standards

Conduct of a survey of syndic judges by judet covenng all 41 judets regarding the judges vlews on the current Romanian bankruptcv statute and proposed amendments

Assistance to the Minlstrv ot Justice m the evaluation of survey results

4nalvsis ol. bankruptcv statistics and assistance to the Mmistry of Justice m analysls of the pracncal mplicatlons and conclusions drawn theretrom

Monitonng of the legislative status oi bankruptcy related laws and amendments

Problems/Issues Certaln amendments (Emerg Old 58) vet to be considered or passed bv the Romanian Parliament have the effect ot leverslng certaln provlslons ot Law 6-1/1995 The Resldent Xdvlsor belleves that certnm provlslons contamed wtth~n Emerg Ord 58 significantly ~mpede the Bankruptcy System and set back Bankruptcy Reform Note Resldent 4d~1so1 at one polnt rece~ved lnstructlons itom USAID Bucharest to avo~d actlvely advocatmg a posltlon on Emerg Ord 58 Howeve~ through contmued consultations with the Mln~stry of Justlce (and through the survey results) the general narure of Lssues concemng these amendments have been commun~cnted pnor to the Romanlan Parliament s consideration of these amendments The next phase of t h ~ s project contemplates dlrect discussion wlth members of the Romanian Parliament ~nvolved In the diaft~ng of bankruptcy legislat~on

The blinlstiy ot J u s t i ~ t has provlded statistics that collect basic bankruptcc case filing data from all 41 judets across Romania The statisti~s l i e avail~ble onlt tor the 1996 and 1997calendar vears Since Law 64 only been m evlstence since late 1993 the statlsrlis iovei most ot the per~od in which LJW 64 has ~overned This data mcludes number or new petitions number ot cases iesolced bv tvpe and by tlme outstanding as well as bv the rnodalitv ot resolution (reorganization hquidation rejection \cithdrawal dosed 2nd other) A beries of electronic spleadsheets were prepared by the Advisor to analvze the data ov comparison and evamination ot relationsh~ps between ~ategories

Cclvent I e nccw act The data was provlded dlrectly from the Ministry of Justice and has not been venfied or tested by the Resident Advlsor Analvses and conclusions drawn therefrom can be no more accurate than the underlymg data upon whlch thev are based The Advisor has no method of verifving the data provided f o ~ 1996 However during the Adv~sor slte cisitat~ons inquiiv was made to the derks and judges ot the respective judets visited regarding the activlty for the calendar Jeai 1997 In most cases the data plot ided locallv did not match the reported statisncs presented by the Mmistrv ot Justice -\lthough numbers did not \ aiv to an extreme degee it IS unclear whv thev do not correspond In addition the 'vlinistry ot Justice data ~ontained sevelal Internal inconsistencies which had to be coi~ected

A copv ot the spieadsheet analvsls B ~ I I D ~ C L SCCIIIJ~ICJ attached as Appendlx B to this report

Points or mteiesr l e~ea led bv the bankru~tc data

Cases at begmning of \ e a Add Uew petitlons

Subtotal Lzss Cases lesolved Cases iemaining ~t \ eal end

Total ieolganlzations Total liquidations

Total petitions iejected 93 22

An estimated 6 000 cases have been filed under Law 6411995 The number of new petitions decreased between 1996 and 1997 by 8 3 % The number ot cases outstanding at year-end 1997 mcreased by 93% over that of 1996

Petitions ~ n d total cases outstandine bv top ten ludets are as follows

1 Bralla 2 Olt 3 Bucharest 4 Vasiliu 3 Cluj 6 k i d 7 Galati 8 Hunedoara 9 Slblu 10 Neamt

New Pent

New Pent

Total Outst

'Note 1370 o f these cases were d~sni~ssed as hav~ng Improper venue

The top ten judets r a d e d be vear end 1997 cases outstanding accounted for approximately 57% of the total

The two judets with the most cases outstanding at year end 1997 (Braila and Olt) were not part of what is considered the six major Romanlan busmess centers (Bucharest Cluj, Brasov T i m s Constanta Ias~)

Only two of the SIX major business centers were in the top ten hst of judets m total cases outstandmg at year end 1997

During slte visitations the Resident Ad\ isor accon~panied no less than SIX svndic judges in chambers and In court to observe and dlscuss Lases ~ n d Issues taced bv the svndic judge In actual day to-dav practice

A~ztorl~lla Flu1 LSCLI Bucharest tr~bunal judge Case revlew Sabina Pioducts Court administration Rev~ewed Bucharest court procedures related to syndic case management Document flow Prepared Doczrmmr F l o ~ v / S u t m Overvrew is attached as -\ppendiv C to this report

Ioan Grorpi Cluj syndic judge Case revlew Banca Dacia Feliv

Mana Navnlcr Bucharest syndic judge Case review Infaesa Case review Zephlr Evlm

L L rlia P I I I L I I I Brasov bvndlc judse Case review Lzmevim SA Case review Eternia Tour S R L

Gabr wlla Cornsa Brasov syndic j~ldge Case review FTI COM SRL Brasov Case ievlew S C Anna SRL Brasov Case revlew Dngal SRL Case lev lew S C I H D SRL Brasov

Vfflrrn Ayostol Consranta svndic judge Case review S C Peila Llnail SRL Case review S C Compress Holding SRL Case review S C L & M Intermed SRL Case review S C Pellect SRL

VII Other

Collateral Law The Resident 4dv1sor conducted mvestigation and review of the structure and operation of the present Romanian collateral law scheme (secured transaction law) Durmg this review the Advisor became aware that the Mmstry of Justice has commissioned the draftmg ot a new Romanian collateral law by well-respected ~ornrnercial law professors Involved m this process are the EU and ABA CEELI If comments by the EU are mdeed incorporated and addressed m the revlsed draft ~t appears that the collateral law will meet western standards A copy of the Seczii ed Transactron/Collarera[ Law Refonn Prop1 e n Ciemornndum is attached as Appendix D to t h s report

It is unknown when a final draft will be submitted to the l\/linistry of Justice for consideration The Resident Advisor has been in contact with ABA CEELI and scholars mvolved with the drai'hng

Video Produc t~on The Resident Advisor is in the post-production, editing and finalization phase of the videotape t r a m g materials based on the Administrator Syndic Judge and Liqu~dator tramng semmars The videos were by design Intended to be used in conjuncnon with the written semnar course books for each of the named semmars Over 40 hours of senmar tootage requlre editing 4 s such post-production is still in progress A t w o - m u t e ~nfomercial style presentanon b ~ d e o has been or w ~ l l be provided as brlet sample of the video tramng format

The videotapes and the written seminar course books are intended to provide a permanent legacy of this project A pamcular lecturer s hnowledge evpenence and presentation stvle are unique Further the complex subject matter of bankruptcy law appl~cation and practice does not lend ~tself well to ham-the tralner type programs (1 e Only Judge Georgiu can effectivelv deliver the lecture on how he resmctured Banca Dacla Fehx ) The videotapes are intended to provide a lugher quality of second-generation knowledge transfer than would a tram the trainer program

M ~ n ~ s t r y of Just~ce S u r v e y R e s u l t s - Sect~on I I

Append~x "A"

BANKRUPTCY LAW SURVEY RESULTS

MINISTRY OF JUSTICE

ARTICLE NO 2

# Yo

# O/o

Law 64

Law 64 1

2% ARTICLE NO 3

ARTICLE NO 8

0 0%

B R I 1 Dtsagree~D 0 I Total

ARTICLE NO 10

I I Law 64 I B R I 1 D~sasreeID 0 1 Total 1

Law 58 10

20%

Law 64

# 1 8 1 54 1 2 1 64

I I I I

ARTICLE NO 25 + 26

Law 64 I B R I I D~saareeiD 0 I Total

Total 50

100%

B R I 38

76%

Law 58 I B R I I DlsaareeiD 0 1 Total 3

4 92%

Law 64

# I 1 % 1 1 59%

/ Law 64 1 Law 58

DlsagreeID 0 1

2%

ARTICLE NO 17

B R I 53

84 13%

Law 58 7

11 11%

ARTICLE NO 25

B R I 5 1

92 73% # I 0 % I 0 O/o

Law 64 I B R I I D~sagreelD 0 ( Total # I 0 64 I 0 ( 64

56 91 80%

3 5 45%

# O h

O/o / 0 O h 0% ( looO/o 1 100% I ARTICLE NO 28

DlsagreeiD 0 2

3 17%

DlsagreeiD 0 1

1 82%

"

3 4 92%

Total 63

100%

Total 55

100%

ARTICLE NO 27

3 4 69%

I Law 64 Law 58 I B R I 1 DtsaqreeID 0 I Total

6 1 100%

Law 64

60 93 75%

B R I I D~sagreelD 0 I Total # I 3 1 59 I 2 1 64

- 1

1 56% 64

100%

# %

# Oh

I ARTICLE NO 62 I I I I t

ARTICLE NO 44

0 0 O'o

# Yo

ARTICLE NO 46

1 ARTICLE NO 67 I I I I 1

Law 64 0

0%

Law 64 0

0%

1 1 64 1 56% 1 100%

6 9 38%

B R I 59

93 65%

Law 58 3

4 76%

ARTICLE NO 52

# Yo

57 89 06%

Law 58 4

6 35%

ARTICLE NO 63

Law 64 1 B R I I DisagreeID 0 I Total # 1 0 59 I 1 1 60

B R I ] DisagreeJD 0 60 I 0

100% 0%

Law 64 0

0 O/o

t

ARTICLE NO 69

Law 64 I B R I 1 DlsagreeJD 0 1 Total # I 1 60 I 2 1 6 3 1

DisagreeID 0 1

1 59%

~ a w 64 1 Law 58

Total 60

100%

# Yo

Law 64

Total 63

100%

B R I 57

90 48%

ARTICLE NO 60

I Law 64 I B R I I DisagreeID 0 / Total

B R I 53

82 81% # 1 0

Law 58 1 B R 1 I DisagreelD 0 ( Total

DisagreeID 0 I Total 2 ( 64

3 13% 1 100°/o 9

ARTICLE NO 67, LINE NO 3

Law 64 0

0 O/o

I 1 I I

DisagreelD 0 2

3 17%

O/o 1 0 O/o 1 14069'0

# 1 0

% 1 1 59%

# %

1 Law 64 I B R I 1 DisaareeID 0

Total 63

100%

4 54 I 0 1 58

,

Law 58 4

6 35%

ARTICLE NO 86

95 24%

ARTICLE N O 87 Law 64 I B R I 1 DisagreelD 0 1 Total

# I 4 53 I 1 1 58

Law 64 8

12 50%

Oh I 6 90% 91 38% 1

B R 1 57

90 48%

DisagreelD 0 2

3 17%

3 17% 1 100%

1 72% ( 100%

Total 63

100%

ARTICLE NO 95

Total 64

100%

B R I 54

84 38%

DisagreeID 0 2

3 13%

ARTICLE NO 106

Law 64 B R I ] D~sagreeiD 0 I Total 2 61 1 / 64

I I I % I 6 56% 91 80% 1 64% 1 100%

ARTICLE NO 120

# %

I

Law 64 1 Law 58

I 1

B R I 1 D~sagreelD 0 Total 5 52 I 0

85 25% 1 OOOO/o 3 6 1

1 00°6 8 20% 4 92'6

ARTICLE 2 Lam 6411995

The object of the law is to establish a reorganizatron procedure, aimed at the recovery of the debtor and the payment of the debt or Iiquidat~on of the debtor's property

Emergency Ord~nance no 5811997

The object or the law IS to set up a procedure for payment of the debtor s Iiab~lities, the debtor havlng ceased payments, bv reorganizatron of the companv and its actlvrty, lrqurdatlon of some assets of the debtor's propertv untrl the liabrllt~es are pard off or bankruptcy

Proposab for Modification made by Romamarr Bankruptcy Inst~tute

The purpose af the law is to create a procedure for the payment of the hab~ht~es of the debtor who has ceased the payment either by reorgmzatron or seflrng some of the debtor s assets up to the coverage of the Iiab~lrtres, or by hqudat~on

ARGUMENTS - the econornrc status wh~ch detemlnes the start of th~s procedure can only be the cease of payments, ~t IS analyzed at; the financ14 level but can have hfferent: reasons -objectwe reasons- lack af a market for the sale of the product, very hgh pnces a d ecancrmlc ~nefficrency, rnacroeconomrc financlal blockage, - subjectwe reasons bad management, fraud, mapproprrate rnarketmg, In case the busrness as such 1s profitable or the e-ustmg assets can be the bass of a viable business

- the procedure IS to be generdly charactenzed as bankruptcy due to the economre status whlch ~t expresses, ~t then folIaws that, accordmg ta the evahatrons made a reorganrzabon plan be suggested or the habrfitles be Xiqudated through partla1 sale or, 1n case there are no chances af recovery, the habihbes be hqtudated by a eolIectwe legal procedure

ARTICLE NO 2, COMMENTS

Satu Mare Tribunal (Emer~ency Ordinance 5811997)

"The easiest way IS to sell assets at the debtor s request, until they are sufficient to meet the liabilities "

Calarasi Tr~bunal (Romanian Bankruptcy Inst~tute)

"The content of the bankruptcy stage is not clear enough "

Braifa Tr~bunal no 3 (Emergency Ordinance 58/ 1997)

The lack of business opportunities generates non-adaptability to the market economy, this may have unintended consequences such as maintaining companies that generate financial blockage "

Braila Tribunal no 5 (Dlsagreesl Diff Opinion) Braila Trlbunal has the followmg proposals

I Law s purpose creates procedures for paying off the liab~lities of the debtor undergoing cessation of payments either by Reorganlzatlon or Bankruptcy The idea is that in the case of Reorgamzation the llab~litles are covered bv the sale of some of the debtor's assets and consequently t h s situation is not different from Llquidation The term, Bankruptcy is more appropnate to h s procedure although IS only used to make the dlstlnction between Bankruptcy and Llquidation In thls case the Liquidation is only made by shareholder's General Assembly in accordance with Law 3 111990, republished "

Timis Tribunal (Romanlan Bankruptcy Inshtute)

"The RBI's euplanations are appropnate "

Bucharest Tr~bunal no 1 (Emergency Ordmance 58/ 1997)

"The proposals of RBI do not include references to Reorgmzation The motivations are not relevant The term 'enterpnse can be understood and can also have an absolute meanlng Deta~ls for Reorgmzation are to be found in the artlcle no 56 - 59 in Law 6411995 These artlcles descRBIe what Reorganlzatlon plan should include be acceptmg, confirming and implementing The spec~ficatlon is mostly descr~ptlve and doesn t prevent In any way the Law's procedure From a different perspective RBI's proposais are amed to replace the term 'Banh-uptcy w ~ t h 'Llqu~dat~on' If the term Llquidatlon is used In Law 6411995 it wrll be appropnate that the hvo jundlcai acts be specified in the first part of the text (art no 2) Liquidation and Reorganlzatlon The two acts shall have a central Importance, and the fractionated sale of the debtor s assets shall be kept as an mtermediary strategy "

ARTICLE NO 2, COMMENTS

Bucharest Tribunal no 3 (Romanlan Bankruptcy Instltute)

"This procedure has two targets -The first target IS the debtor s recoverv and payment of liabillt~es or the hqu~dation of the debtor s assets -Only in case the debtor's recovery 1s not possible, Liquidation shall be undergone The Liquidat~on is also one of the reasons why the informal bankruptcy statement was replaced by Law 6 4 1 995 "

Gorj Trlbunal (Rornan~an Bankruptcy Inst~tute)

"The financial and economlc stage of the debtor doesn t allow his recovery HIS products are not competitive and the markets close down for hlm The only poss~bil~tv is Liquidation by selling all the assets "

Constanta Trlbunal (Romanmn Bankruptcy Instltute)

The RBI's evplanations are appropnate '

Suceava Trlbunal (Romanlan Bankru~tcv Instltute)

"The concept descnptron for article no 2 concernmg the purpose of the Law, has to be bnef and clear and shall not encourage a different understand~ng "

Maramures Tr~bunal (RomanIan Bankruptcy Institute)

"The phrasing of article no 2 IS not appropnate Bankruptcy is not a procedure, as ment~oned in art~cle no 65, point, 1 in the Law as modified by Emergency Ordmance "

ARTICLE 3' Law 641995

No appl~cable provision

Emergency Ordmance no 5811997

Art 3' (1) All evpenses related to the procedure estabhshed by the present Law shall be borne from the debtor s assets (2) The payments shall come from an account opened at a unit of a bank, on the bass of orders ~ssued, dunng the reorganization procedure, by the debtor or the syndic judge, dunng the bankruptcy procedure ov the svndic judge

Proposals for Mod~ficatlon made by Roman~an Bankruptcy InsQtute

'"The evpenses due to the procedure estabhshed by the bankruptcy law shall be pard by the debtor'

When lackrng l ~ q u ~ d i ~ the svndic judge can use sums from a specla1 fund created at county level out of the folluwng sources - verslon a a quata tor the bankruptcy risk pad by every tradesman, representlug 0 5% of the annual taxabIe profit - versmn b the sums representrng the VAT on the sales made v n h n the bankruptcy procedures -versrcm c a fived quota of the bankT-LEptcy nsk, the sum of lei, pad by every tradesman, - versron d a quota of the stamp tzves whch can be used by the khntstry of Justrce

ARGUMENTS - without the possrb~liry of payrng the necessary eupenses, the syndrc judge c m o t perform a hgfx qualxty actrvlty m due tune - the saurces are generated by the bankruptcy procedures themselves, or by other fegaf procedures, or a317.r to make the tradesman aware of the bankruptcy nsk

ARTICLE NO 3, COMMENTS

Olt Trxbunal (Dwagreed D ~ f f Oplnion) 1 "The expenses related to the procedures specified in the legislation regulations will be made from debtor s allowance, they will be made by creditors at the begimrng of the procedure in proposals of 1 to 10 shares from the debtor's total amount We find RBI's evplanations appropnate and add to ~t more discipline for creditors at their appeal in court - e g appeal in Court for frivolous cases E g - appeal In Court for a debt valuing ROL 90,000,000 for a companv estimated to 125 BIO ROL Appeal In Court w~thout paying the judglng tavation whlch amounts to ROL 10 000"

Do11 Trlbunal no 1 (Romanian Bankru~tcv Institute)

"Practice proved that the debtors are declared bankrupt preciselv because they don't have cash available and consequently the debtor is not able to pay an expert who shall provide ldent~fication and inventorv of debtor s assets We find RBI's proposltlons appropnate '

Satu Mare Trlbunal no 1 (Romanlan Bankruptcy Instltute)

"A qulck solution may be a share out of stamp taxatlon made available to the Ministry of Justice "

Vrancea Tr~bunal no 1 (Romanian Bankruptcy Instltute)

"In many cases the debtor, apart from undergoing cessation of payments is also out of assets and money in the bank account "

Calaras~ Tr~bunal no 1 (Romanlan Bankruptcy Insbtute)

"The evplanatrons from part 1 are appropnate The lack of money from the start of the procedure has a negatwe effect "

Calaras~ Tr~bunal no 2 (Romanian Bankruptcy Institute)

"As a rule, the bankrupt debtor 1s usually out of cash He may only have assets left So, he can only afford to pay the Bankruptcy procedure after sellmg the assets The situat~on makes almost ~mpossible the syndlc judge's actwty E g -they cannot hue experts, admmistrators, etc "

Tlmls Tr~bunal (Romanlan Bankruptcy Inst~tute)

"The RBI's evplanatlons are appropriate "

4RTICLE NO 3, COMMENTS

Prahova Trxbunal no 1 (Romanlan Bankruptcy Institute)

' Takmg Into conslderat~on RBI's proposltlons, the synd~c judges actlvlty would be easler m solving out bankruptcy files The notrfied evperts can be pa~d from the opened Bank account The proposltlons are appropriate "

Bucharest Tr~bunal no 1 (Romanlan Bankruptcy Instxtute)

"Because some of the evpenses have to be pad before Reorgan~zat~on or, for Instance bv ~mplement~ng the provisions of art 9, 10 ~t IS necessaw to follow RBI s proposrtions setting up a speclal fimd and addlng a new paragraph to art No 3 1 There are d~fferent oplnlons tor settmg up thrs fund With vanant a), there 1s a certalntv regarding the establish~ng of t h ~ s fund that doesn't decrease the volume of lncomlng to the State Budget (as ~t does In vanants b), and d), With varlant c), it is assumed that thrs fund is exposed to inflat~on movements RBI' proposltlon IS not complete because ~t doesn't speclfv anythlng about the admlnrstratron of this fund "

Cluj Tr~bunal (Roman~an Bankruptcy Institute)

"One of the dysfunct~on of Law641995 IS that there are not enough funds for performing different operatrons requlred bv the procedures Over 90% companres under Bankruptcy are out of cash or assets for sale, these are the reasons why the evpenses requrred by the procedure cannot be made "

I "In case of companies with cap~tal owned by the state, the evpenses required by the procedure shall be ~ncurred by the SOF " I

I Constanta Tr~bunal (Duagree/Diff Opmron)

"The artlcle no 3 is not correct, takrng into account the answers from part 1, quest~on no 8, same oplnlon for art no 1 17, final part "

Tulcea Tribunal lRoman~an Bankruotcv Institute)

"The companres that don't pay the 0 5% share shalI undergo penalties The cashed amount w l l be registered into a speclal account opened for the Tnbunal "

ARTICLE NO 3, COWIMENTS

Mnramures Tr~bunal (D~sagreel D ~ f f Optnlon)

' Our changes In the text are as following The lack of money from the bank account brought up by the blockage notified judge,

, allows the bankruptcy accordmg to artrcle no 8, par 1, to use the amounts of monev

1 provided by the cred~tors that declared their debts I Tak~ng Into account our proposltlon art No 117 doesn t need to be mod~fied T h ~ s

art~cle concerns closmg down the procedure m case cred~tors are not paying their debts Ev~sting of a special fund ~nkolves varlous actlvitles of d~fferent types such as adm~nistratwe, verifying procedures that need a different structure It IS not poss~ble to d~ctate a number of chechng that has to be done bv the one by the expert for lnstance for the sltuatlon descRBIed by the art No 82 or 83 - in case the debtor does prov~de a list with all h ~ s cred~tors or he doesn't provide all the documents requested as st~pulated ln the art 21 This actually happens in most or the cases Useless evpenses can be Incurred t h ~ s wav and the conclus~on can be that the debtor doesn t have assets avalable and the creditor stays passwe The procedure can last for years when there are no buyers ava~lable For Instance for file no 3991 1996, shows that 20 000 000 ROL were pa~d monthly for almost one year, for guardmg personnel, because of the lack of buyers This means that the h n d destmed for Bankruptcy cases will be completely used for just one case In what cond~t~on can t h s fund be enlarged?"

ARTICLE 8 Law no 64/1995

The syndlc-judge is appointed by the president of the court on the grounds of Art 13, par 3 of Law No 9211 992 on judicial reorganization

Emergency Ordinance no 5811997

No applicable provision

Proposals for &I.od~ficatron made by Romanlan Bankruptcy Institute

The syndlc judge IS appo~nted in each case bj the law court. among the judges des~gnated by the prestdent of the Iaw court accordrng to art~cle 13, paragraph 3 of Law 9211992 for jud~c~al orgamzatlon, to carrv on along wrth the judlcld acemtv, other attnbuhons as we11

,.UtGTJMEiciTS m rts initla1 form the tevt engenders confus~on and 1s m contrad~ctron with other texts as art 6 and 30 -The appointment of the synd~c judge for each file ts an attribute of the Court of Justxe, the Trrbunal respect~veIy, by the sentence of opemng the procedure, the judges of whrch the Tnbmai can make k s appomtment are those adrnmstratmly des~gnated to carry on rhe attnbubons of a syndic judge

ARTICLE NO 8, COMMENTS

DoIj Tribunal no 1 (Roman~an Bankruptcy Instltute)

"Openmg special office for syndic judges specialized in thls type of activity, would be a good idea Organivng specialized courses for judges may be another point "

Satu Mare Tr~bunal no 1 (Law 6411995)

"The Tnbunal has confirmed Law 6411995 as being the most appropnate '

Vrancea Tribunal no 1 (Romanian Bankruptcy Institute)

'Many Magistrates can be appointed svndlc judges so, as their actlvlty shall continue "

Caiaras~ Tribunal no 1 (Law 641 1995)

'Practically, the consequences are the same The procedure proposed by Law 64, is less flexible as proposed '

Bralla Tribunal no 2 (Roman~an Banhruptcy Instltute)

"The ~nitial presentation of the law was In contradiction wlth the legislation for judges organizational structure "

Iasl Trlbunal (Dlsagreesl Diff Opmlon) I "The f o l l o w g should be added to the current text wlth the written approval Comments The syndic judge is the Admnstrator of the debtor's assets and business In ~ t s structure, the posltlon of svndic judge requires admlmstrative shlls7 such as economlc knowledge, that exceeds the amount of knowledge of the Law School Graduates The syndic judge's notification can only be made with the Magistrate approval, talung tnto account article no 3 from Law 92/ 1992 The syndic judges' tasks cannot be compared wrth other judges' administratrve tasks accomplished rn the Court The art 732 m Comrnerc~al Code used to assrmllate the syndlc judges w th

Magrstrates responsrble for sentences They were both appomted by Royai dec~slon which means that they decided freely upon thelr respons~bllltles or obllgat~ons The apporntment of a judge as synd~c judge agarnst hls wll means to obllge hlm to assume vanous responsibllit~es for whlch he may not be enough prepared because the syndic judges qual~ties are different than other judges "

T~mis Tribunal (Law 6411995)

"The text meets the legal requirements concemrng the syndic judge s appointment '

ARTICLE NO 8, COMMENTS

Prahova Tribunal no 1 (Roman~an Bankruptcy Inst~tute)

'The tevt is clearer and more speclfic in this Interpretation '

Bucharest Trlbunal no 1 (Law 641 1995)

"The confusron RBI refers to 1s not proved by facts because artrcle no 8 refers at the appolntment of a judge as syndic judge Art Nb 6 and no 30 refers at the appolntment for a specla1 case oi a synd~c judge, facts that can be proved by svstemic interpretation "

Gorj Tr~bunal (Dlsagreesl Diff Opmon)

I "The actual svndlc judges do not have enough training, prepared for financial and economic lssues ,, I Constanta Tr~bunal (Romanran Bankru~tcv Institute)

"The RBI's evplanations are not correct because, according to the Law, and the opemng of Liqwdation sentence, but the regulations do not make procedure from the Cornmerclal Code "

Cluj Tr~bunal (Roman~an Bankruptcy Institute)

"RBI's propositlons are justified Practice proved that the Cluj Tnbunal acts in the exact same way The president of the Tnbunal draws a list with all the syndic judges based on law 9211 992, art 13 From the list, the president of commercial section solves the petition submitted under Law6411995 appoints one of the judges as syndlc judges, talung into account the number of files and the importance of the case "

Maramures Tribunal (Romanian Bankruptcy Inst~tute)

'The tevt proposed by RBI is clearer practrcally speaking, thls is the way we currently act In our Tnbunal Our correction consrsts in addlng to t h s tevt the followng Procedure's prowslons concernmg the mncompatlb~llty, the denunc~at~on and the judges' appeal shall be applied m a correct way "

. , , Law no 6411995

Emergency Ordinance no 5811997

(1) The mam dut~es of the svnd~c-judge in comphance wth the current law are as shown below

e) maintams and annuls contracts concluded with the debtor

Proposals for Modlficatmn made by Roman~an Bankruptcy Institute

0 contenr Art 10 Par 1 e) has the folfown, 'mantarrung or rejectrng some contracts s~gned by the debtor '

ARGUMENTS the h e n c a n termrnoIogy - ' rejectlonn of contracts - was used uencles espeeraily m order to avoid the mstrtuuon of annulment w ~ t h its spec~fic exl,

- the anrrulrnent is a sanction fur the default m perfarming the contractual obhgatrons by one of the partres and not a means of mamrnrung the debtor's assets, - annulment can be requxred accordmg to Art 1019-1 020 of the Code of Crwf law, only by .the party who has accomphshed the contractual obhgaQons, whereas the debtor m payment default, most frequently, has not accomphshed the clauses of the contract and he IS unable to accomphsh them m the future - annulment can be declared only by the court of just~ce and rhrs wrlI delay the procedure, whle the rejecQon of the contracts by the syndx judge 1s more rap~d

ARTICLE NO 10, PAR NO 1 POINT C , COMMENTS

Hunedoara Tr~bunal (Emerqency Ordinance 581 1997)

'The adminrstrative tasks should be drstnbuted to certarn persons, appointed by the court among the body of Liqurdators and administrators slmllar to the body of chartered accountants - which w~l l be organized and w11l work parallel w th the Tribunal In this way the svndic judge will only take care of juridical tasks that are verv important and also very complex '

Satu Mare Trlbunal no 1 (Romanian Bankruutcv Institute)

' The cancellation can onlv be passed bv the Tribunal There are cases when th s sort of measures is requlred "

Calarasi Tribunal no 1 (Disagreed D~f f Opinion)

" Marntamrng or denunc~at~on ' for rt covers a larger area of practical posslbi11tres '

T~mis Trlbunal (Roman~an Bankruptcy Institute)

"The RBI's explanations are appropnate "

Prahova Trlbunal no 1 (Romanian Bankruptcy Instxtute)

"It avo~ds the delavs of solving Bankruptcy files '

Braila Tribunal no 5 (Emergency Ordinance no 58/ 1997)

"The Rejectlon' of the contracts by the synd~c judges has to be spec~fied by the Law 'Rejection' IS a new act that has not ewsted before in the Romanian leg~slatron The lack of a law concemng the Rejectron makes all the opimons m these matter slmple assumptions "

Teleorman Trlbunal (Emergency Ordinance no 58/ 1997)

"The 'rejection of the contracts doesn t evlst in the Romanian Legislation "

Bucharest Tr~bunal no 1 (Emergency Ordinance 581 1997)

"In the Romman Legislation, the act of contract Rejectlon has not been regdated vet and the denunciation has a preclse understandmg as unrlateral act of wll, of one of the contractors The second term, used rn article no 10, par no I , point e IS nonsense Exceptionally, the term 'rejection' could be Inserted in Law 641995 onlv wlth the evplanations concerning ~ t s cond~tions and effects dictated by the svndic judge '

4RTICEE NO 10, P4R NO 1 POINT C, COMMENTS

Bucharest Tr~bunai no 3 (Rornanlan Bankruptcy Inst~tute)

"Synd~c judges 'reject~on' or denuncratron of contracts concluded bv the debtor seems to be qurcker than cancellatron Considering that, the Romaruan crvrl Code rejectlon or denunc~at~on of contracts 1s not spec~fied we think rt IS necessary to regulate the rejectron' and the procedure to be observed by the syndrc judge rn th s type of cases "

Cluj Tribunal (Rornanlan Bankruptcy Inst~tute)

"The RBI s proposrt~on 1s correct There are drfferences between cancellat~on and rejectlon and there should be no conhsron "

Gorj Tr~bunal (Disagree1 D ~ f f Opmon)

"We have a d~fferent oplnlon whereas drscussmg the terms of anv hmd of contract mvolves contentlous procedures of the two parts w~ th opposite interest that can only be solved by the Court, accordmg to the regulat~ons m force "

Tulcea Tr~bunal (Roman~an Bankruptcy Institute)

"The cashng procedure performed by the Syndrc judge should be removed because the judge cannot accomplrsh adrnlnistrative tasks The judge can decrde upon distRBIut~on of the amounts but he cannot do the cashmg because he IS not a cashier but a judge "

Marmures Tr~bunal (Dwagreesl D ~ f f Opm~on)

' We find more appropnate the term denunc~ation' than 'rejectron' because the last one doesn't have any legal trad~t~on We should also add 'contract rn progress or contract for successrve services If we remove 'cancellat~on' from the t e a it w11 be difficult to realrze whether t h~s IS a contract m progress The marntalmng or denunc~ation of a contract can only be done as long as Liquidat~on procedure hasn't started vet If we mamtain a contract for successwe services and at the same tlme llquidatlon procedure starts we have to face the situation of sellmg plant and equipment needed to complete the contract we have rejected "

ARTICLE 17 - Par 1 Law 6 4 1995

Within 45 days since the beginning of the procedure provided in this Law, creditors who hold at least 50% worth of the debts may decrde to hire an admlnistrat~ve receiver (Admm~strator) who will be appointed bv the court The admmstrator must be a certified accountant, an expert accountant or graduate of an economlc studies or juridical university, and have at least 5 years of economlc or ju~ldical practice

Emergency Ordinance no 5811997

W~thin 45 days after the procedure starts as stipulated in the current law, the credltors that own at least 75 per cent of the total value of receivables can dec~de, w ~ t h a majontv representing at least 50 per cent of the total value of receivables, upon hinng an adrnin~strator - an individual or a company - that will be appomted by the Court The adrnin~strator - an indiv~dual - IS the permanent representative - of the adm~nlstrating company, shall be a certified accountant, expert accountant or graduate from economics or law and have at least 5 vears experience In the economlc or legal field

Proposals for &lodrfication made bv Romanian Bankruptcy Institute

ART 17, PAR 1 wdl have the fallowmg content "The syndic judge can decide upon hmng an admmnlstr&or who wll be designated by the Tribunal, an recommendaQon of the credltors boar& regardmg the Iegal status of the admmxs~~or The adnunstrator can be a natural or a Iegal entity The admm~strator natural entity or the permanent delegate - naturaI entrty- of the mmagxng companv wrII have to be an authonzed accountant, an expert accountant or to have a busmess or law degree and to have at least 5 years of experience In the field of law Or economy "

ARGUMENTS - the provatan that the deasron af the appolntn-ienr of an admmrstratar belongs to the credtror board d e s ~ t : mpassrble to appornt the admrmstrator of a debtor adm~mstrator xn almost every case The credltors wlL alwavs chose the admmrstratmn of the debtor by the syndtc judge, whose actlwty wfl not be pard by the debtor - tlre syadro judge 1s not spec~ahzed m management and thus he 1s not able to effic~ently manage the acttvrty and the assets afthe debtor - the recommendatmn wll have to refer especially to the admn~strator~ in pomt of professzod quahtres and af the remuneratnm asked

ARTICLE NO 17, COMMENTS

Oit Tribunal no 4 (Romanlan Bankruptcy Instltute)

"To have a correct and effrc~ent law concenung the recovery of the debtors' actlvlty or l~quidation of the merchant havmg faded In h ~ s busmess or to create heaithy competition that is profitable to society, the involvement of an occas~onally administrator IS not suffic~ent even ~f he IS well tramed and meets condit~ons stipulated by the law In our opinion, self -established inst~tutions dealing w~th Reorgmzatlon and Llquldation cases for commercial companies should have a permanent actlvlty should be formed of management experts, economists and evaluatmg experts Such instltutlons can be an efficient and professional support "

Satu Mare Tribunal (Roman~an Bankruptcy Institute)

The qual~ty of the Administrator's profess~onal preparation and also h s remuneration can count verv much In solvmg t h ~ s type of litigation '

Prahova Tribunal no 1 (Romanian Bankruptcy Instltute)

"Bankruptcy cases should be expedited, especially the complex ones "

Bucharest Tribunal no 1 (Romanlan Bankruptcy Instltute)

"Practice proved that RBI's proposit~ons are correct The propositions should be extended by specifying the payment method used for the Adm~rustrator In the sense of art point no 3 '?

Bucharest Tribunal no 2 (Disagree/Diff Opinion} I 'The Admlmstrator should be appointed as a synd~c judge without the approval of creditor s General meetlng and w~thout Tribunal's approval The Tnbunal should be not~fied when the creditors holding over 75% of the total value of claims do not agree with the appointment of the Adrnlnistrator "

Cluj Trlbunal Pomanlan Bankruptcy Instltute)

"All RBI's specifications are correct and have been proved in practice so far and they made adrninlstrative tasks impossible to be performed "

Gorj Tribunal (Emergency Ordmance 58/ 1997)

"In all cases an admirustrator should be appointed Proposrtion Settmg up institutions special~zed on training administrators and liquidators that wll be dealing with economlc aspects provided by Law 64 "

ARTICLE NO 17, COMMENTS

Mararnures Tr~bunal (Romanian Bankruptcy Inst~tute)

"Of course, the synd~c judge is the one who should take the imtiatwe to make a proposltlon for the adm~nistrator but the difficulty of hls task is far larger In fact, the administrator doesn t know what hls dunes are even ~f he is a CPA or Expert Accountant The synd~c judge is not able to fix these dut~es because he's not been tramed enough In the economic field The Ministry of Justice should work with the Expert Accountants Bodv m order to elaborate the Admimstrator tasks in Bankruptcy or Reorgan~zat~on The task draitmg is a verv important topic also for the Liqu~dator "

ARTICLE 25 Law No 6411995

W i t h 48 hours since the regstration of the petltron, the court will serve the debtor and the territorial Chamber of Commerce and Industrv wlth a copy of the respectwe document, and will have a copy posted at the court entrance

Emergency Ordinance no 5811997

No applicable provision

Proposals for Modification made by Roman~an Banhruptw Institute

ART 25 wdl have the follotvlng content "The T n b m l salves the petrtlon by summonmg the debtor, the Chamber of Commerce or the cred~tar who formulated the petrtron dellvemg rn every case a sentence by wh~ch the ceasmng of payment IS cemfied, the procedure 1s opened and the svndc: jud, oe IS

appornted If the Tr~bund establtshes that the debtor 1s not m pavment default, lt w11 reject the petltlon and w1I1 decrde that the decls~on be posted on the door the court of lustxe In t h ~ s case the petltmn wll be cons~dered as havmg absolutely no effect ever smce zts registratron "

ARTICLE NO 25, COMMENTS

Dolj Tribunal no 1 (Romanran Bankruptcy Inst~tute)

'The dec~s~on should also mentlon the moment when payments cease "

Satu ~Mat-e Tr~bunal no 1 (Romanian Bankruptcy fnst~tute)

'The Decmon makes all ~ t s effects clear from the very beginning "

Calaras~ Trlbunal no 1 (Roman~an Bankruptcy Institute)

"The evplanat~on brought by RBI helps the celer~ty of solvmg th~s case

Prahova Tr~bunal no 1 (Romanlan Bankruptcy Insatute)

Passrng a sentence to settle the real s~tuatlon of the debtor, the svnd~c judge can make a proposal and take the necessary steps to speed up the complet~on of the cases At the same tlme the synd~c judge is able to overcome from the start the debtor Insecure sltuatlon "

Bucharest Tr~bunal no 1 (Romanlan Bankruptcy Inst~tute)

"Pract~ce proved that the current regulat~on concemng cornmumcation and solving objections 1s mefflclent The reason of ~neffic~ency IS that In many cases the debtor doesn't draw the object~on so that the debtor' lnab~l~ty to pay cannot be proved wth celenty mvolved by the procedure proposed by RBI In order cred~tor's abus~ve requests the article no 26, par 2, should be mmtained This artlcle specifies that the credtors should pay a bond amountmg to 30% of the total value of the receivables "

Cluj Tnbunal (Romanlan Bankruptcy Institute)

"Practice proved that several procedures were opened overcharging the Court's actlvlty because the debtors are not able to proceed correctly m objectlon matters mentioned ~n art 26 Over 90% of cornrnerclal companles do not have proper jundlcal assistance, the associaaons and admi~llstrations of these companles were only under Law 64 "

ARTICLE NO 25, COMMENTS

Suceva Tr~bunal (DuagreeDlff Opm~on) I "Solv~ng the mtroductory petlt~ons that establish the debtor cessation of payments, openlng the procedure and the appo~ntment of svnd~c judge bv a sentence at the same t ~ m e would turn Into a situation where In that part~cular file, several sentences would be del~vered Cons~derlng that our oplnron IS that the provlslons of art 25 as proposed bv RBI should be rev~ewed only for the act that wlll be used by Tr~bunal to make the dec~sion of cancellation Instead of sentence "

~Varamures Trlbunnl (Romanian Banhruptcy Institute)

'Solvmg the cred~tors petitions according to RBI's proposltlons IS more appropnate There are procedural aspects that should be mserted In the tevt Chamber of Commerce should solve the request, w~thout publicity Company s financial sltuatlon should involve a mlnlmum of confident~ality up to the sentence dehverv The companv status depends on completion of the busmess actlvitles and In order to obtams cred~ts It IS compulsory to st~pulate standards that speed up ach~evements Pract~ce of solv~ng the objectlon to Llqu~datron petitions proved that for the Court, the elements Inserted m art 24, pomt no 2 - mere refusal to pay based on evceptlons judged trustworthy by the cred~tors IS not clear at all The Court gets mvolved m the common law In cases when the forced evecutlon for the start of the procedure IS not requ~red The case objectlon should be compuisory as well as the postponement for the Defense should be gwen for a l ~ m ~ t e d per~od of tlme (domest~c c1v11 procedure) "

ARTICLES 25 and 26 Law no 6.111995 3 69%

Art 25 Within 48 hours since the reglstratron of the petition, the tnbunal w~ll serve the debtor and the terntonal Chamber of Commerce and Industry with a copv of the respective document and wlll have a copy posted at the court entrance Art 26 (1) If, within 5 days since recewng the copy or the petltron filed by the credrtors the debtor contests the fact that he has stopped payment m the conditions established under Art 24 par ( I ) , the court wlll have to convene within 30 davs a meetmg gathenng the creditors that filed the petitron the debtor and the terntonal Chamber of Commerce and Industry (2) At the request of the debtor the court rnav force the creditors who filed the petltlon to deposrt wlth a commercral bank, wthrn 5 davs, a bond worth 30% at most of the value of the debts The bail wrll be returned to the creditors rf the~r petrtlon IS adm~tted f the pet~t~on is rejected the ball w~ l l be used to cover the damage incurred to the debtor If the bail is not deposited m due trme, the introductory petltron w~l l be rejected (3) Where the court establishes that the debtor has stopped pavments, it will reject the debtor's contestation and the procedure will contlnue

(4) Where the court rules that the debtor has not stopped pavment it wlll reject the petition of the creditors and wrll order the decision to be posted at the entrance to the court If the petition IS rejected, thls positron should be consrdered as bearing no effect, ever since ~ t s registration

Emergency Ordinance no 5811997

No applicable provrsion I I

Proposals for Modification made by Romaman Bankruptcy Insbtute

ART 25 and ART 26 in the present wording are abrogated

ARGUMENTS - the contsadxtory procedure allows the p m e s to bnng evrdence and the pmnauncement of the decislon marks the moments of the pmcedure and clarifies its effeets

ARTICLE NO 25 + 26, COMMENTS

Satu Mare Tribunal no l(Romanlan Bankruptcy Inst~tute)

"There is a possibll~ty for the two parties to present proof"

Vrancea Tribunal no 2 (Disagrees1 Dlff O ~ i n ~ o n )

''Glv~ng notlce of appeal bv creditors wthout havrng a strong motlvabon shall be avoided The law should stipulate the bond payment as compulsorv and ~t should be registered at CEC The amount can be used In case of petitlon rejectlon for the recovery of the debtor s loss or for administrating o~her Banhptcy cases '

~ r a h & a no 1, Bucharest no 1, Cluj Tribunals (Romanlan Banhruptcy Institute)

"For the same reasons shown m the prevlous artlcle '

~Mararnures Trlbunal (Romanlan Bankruptcy Institute)

"The cancellation proposed is correct, m general terms, but less correct concerning the bond For article no 26, point no 2, the followmg specification shall be added 'The bond, together wlth the appeal rejectlon agamst Tribunal's sentence of payment cessation and syndlc judge s appointment, should be refund A hmrted penod of tlme shall be established for debtor's repavment m case cred~tor petitlon w rejected Up to that moment the bond shall not be released "

ARTICLE 27 Par (1) Law no 6-4/1995 0 O h

Followmg the reglstratlon of the debtor s petltlon the debtor's renouncing to contest of the cred~tors' petltlon or the rejection of the debtor's contestation of this petltion the court will notify the creditors thereof as well as the debtor and the Office of the Reg~ster of Commerce where the debtor IS registered, w t h a vlew to a relevant recordmg

Emergency Ordinance no 5811997

Proposals for iModlficatton made by Romanlan Bankruptcy Institute 100%

The Tnbunaf's decmon of openmg the procedure w l be commmrcated to the credrtor, to the debtor and to the Office of the Commerce Regmy where the debtor IS In evrdence for hawng reg~stered the mention

I

D~sagree/Different Opinion ( 0%

ARTICLE NO 27, BAR NO I, COMMENTS

Satu Mare Tr~bunal no 1 (Romanian Bankruptcy Institute)

' Sentence shall be cornmmcated to all partres Involved m the case "

Calarasl Tr~bunal no 1 (Roman~an Bankruptcy Inst~tute)

"The proposition 1s correct as a consequence of the prevrous artrcles "

Bucharest Trlbunal no 1 (Romanian Bankru~tcv Institute)

'We agree wth RBI's proposrtions and In correlation wth art~cles 25 and 36 "

Cluj Trlbunal (Romanian Banhruptcy Inst~tute)

'Practrce proved that at t h~s stage of the procedure ~t 1s ~mposs~ble to rdentrfy all the creditors of the debtor

Gorj Tr~bunal (Romanian Bankruptcy Inshtute)

"Comrnunicat~on makes poss~ble the acknowledgement and ~dentificat~on of procedure's steps for the debtor, cred~tor and Reglster of Commerce where the debtor was reg~stered "

Maramures Tr~bunal (Roman~an Bankruptcy Institute)

"The proposltron IS correct but ~t has to be clearer rf it IS a sentence or a conclusion If not, for any other reasons, at least stat~sticallv, m a file we can Include only o m decls~on If the provrsrons related to the conclusion of the procedure are m force, these measures shall be Included by decrs~on in the rmtial file where the procedure started It would be interesting to rnform the Official Gazette about a provlslon m this respect The only problem IS to decrde on whose evpense thls wl l be performed There IS a central unit for all cases of payment at the Natlonal Roman~an Bank The BNR should have informat~on on the sltuatlon of debtors going bankrupt The sentence should also be notlfied to the Trade Registry where the branch or subsidiary of the debtor is located "

ARTICLE 28 Par 1 Law no 641995

Art 28 (1) The notlficat~on wll also include the convocation for the first meetlng of the cred~tor's assembly, whch must take place w ~ t h ~ n 30 days at most smce the reg~strat~on of the debtor's petltlon or the date of reglstratlon of the cred~tors' petition, non-objected by the debtor, or w ~ t h n 20 days since the objection of the debtor was rejected

Emergency Ordinance no 58/1997

ProposaIs for Mod~ficatian made by Roman~an Bankruptcy Institute 92 20%

The s p & c wlil convene the first meehng of the creditor's assembly wthxn the most 30 days fiom the pronouncement of the declsron of operung the procedure

ARTICLE NO 25, PAR NO 1, COMMENTS

Satu Mare Trlbunal (Roman~an Bankruptcy Inst~tute)

"The 30-day period of time starts on the day when the decision is announced "

Calaras~ Trlbunal no 1 (RomanIan Bankruptcy Inst~tute)

"The proposition is correct as a consequence of the previous articles "

This is because the administrations or the debtor companies w~ll not submit the documents mentioned in art 21 par no 1, in the law so as to decide upon the list of creditors to summon the creditors' meeting, the syndic judge will have to appoint an evpert to draw the list of creditors But this procedure takes a long time and the 30 days are not enough to summon the credltor7s meeting Speclfvlng penalties for admmstrators who do not support the actikity of the syndic judges is verv important and avoids the trend of lack of Interest occurring at the moment "

Prahova Tnbunal no 1 (Roman~an Bankruptcy Inst~tute)

"This propositions leads to procedure's simplification "

Bucharest Tr~bunal no 1 (RomanIan Bankruptcy Inst~tute)

"We agree wth RBI's propositions for correlation with article no 35 36 and 27 '

Gorj Trlbunal (Dlsagreesl Different Opmlon)

'Neither the current regulation nor RBI's propositions specify the possib~lity to Identify all the creditors Thls can be done after the admlmstrator's appointment that shall replace the list of creditors drafted under debtor's administration "

Maramures Tnbunal (D~sagreesl D ~ f f Opm~on)

"We don't find any of ths propos~t~ons correct Out of 150 files that we had since the text's publrcatlon never observed lt because the debtor never supplied the 11st of creditors It IS d~fficult to draw an analys~s wthm 30 days that should replace debtor s work and also to notify all the cred~tors upon this Both vmants have no real ground The Law doesn't require any penalty for the debtor in case of non-observance of specifications provided by, art 21 Under Cornmerclal Law, a similar act IS considered as 'Simple Bankruptcy' Mavbe, a penalty that can be changed into penalty by putting the debtor in jail can decide hlm to give up his passive attitude Our proposal IS

'The syndlc judge shall summon the General Assembly everv time lt IS necessarv, or when at least three creditors come with a request concerning the same matter "

ARTICLE 29 Law no 6-4/1995

The debtor w~l l have to file the documents requlred under art 21, par (1) within 15 days slnce receiving the copy mentioned under art 27 m case he does not object the petltion of the credltors or from the date hls objection of the credltors' petltlon were rejected, as per art 36, par (3) In case he has objected to it

Emergency Ordmance no 5811997

Proposals for Modxficabon made bv Romanran Bankruptcy Instrtute

The debtor wrll have to enclose In the tnaiys file the documents requlred bv Art 21 Par 1 wthm 15 days after the sentence dehuerv accodng to Azt 27 ~f these documents were not enclosed, under the penalty of the pavment of 1% out of the salary for a day of delay by the debtor's adm~rustratclr

ARGUMESTS the provmon of a penaltv of the debtor's admmmstrator makes hrrn ddrgent m encfosmg the documents required by law-

ARTICLE NO 29, COMMENTS

Hunedoara Tr~bunal (Romanian Bankruptcy Inst~tute)

'A similar penaltv is requlred for the executlve bodles of the debtor who does not provlde the svndic judge with mformation he asks for, on the grounds of art No 33 in Law 64 The span of 90 days mentioned In art 33 are not correlated with the span of 3 years and the span of 120 days mentioned in art No 40 In Law 641 1995 for the execution of cancellation acts We prefer to remove the reference to the span of 90 days In the Law "

Satu Mare Trlbunal no 1 (Romanlan Bankruptcy Institute)

'If the amount IS not submmed, a penalty 1s required The debtor s admlnlstrator shall pay the amount of 10 000 lei per day for postponement t h s measure IS also for lncreasrng case solving '

Prahova Tribunal no 1 (Romanlan Bankruptcy Inst~tute)

"The debtor is interested in submitting the necessary diligence for solving bankruptcy cases '

Bucharest Tr~bunal no 1 (Roman~an Bankruptcy Inshtute)

"Practice proved RBI's propositions as correct for most of the cases In the actual stage of it, Law 64 stipulates the obligation of submittrng all the documents but it doesn t require any penalty for non- - submlssron cases The Law 1s based on Debtor's good will The Law's drawmg shall be improved "

1 Bucharest Tr~bunal no 2 (D~sagrees/ D~fferent Opm~on)

"The debtor shall submit for the documents requested by art 21 paragraph 1, according to art No 27 w t h n 20 days after sentence delivery, for non-submiss~on, law should sti~ulated ~enalties '

Clui Tribunal (Roman~an Bankru~tcv Institute)

"In most of the cases, the specifications prov~ded by art, 21 and art 29 m Law 64 are not followed and this 1s the reason why there 1s not enough financlal support for paylng an expert For the indiv~duals responsible for meetmg the requirements st~pulated by the law a penalty 1s requlred '

I "In the opening of the procedure request, a penalty should be speclfied for the debtors The debtors should submlt all the documents requested by the text ~nvolved " I

ARTICLE NO 29, CONIMENTS

Constants Tribunal (Romanian Banhruotcv Institute)

"RBI's evplanatlon IS approprlate but the llrnlted amount of money should be fixed at ROL 1,000,050,000 "

Maramures Tr~bunal (Disagreed Different Opin~on)

The tevt IS not clear enough It is not spec~fied lf the penaltv is a contravention sanctlon that goes under Law 321 1968 regulations or moratorium damage that to a certain date should turn into refunds There are tvpes of files whlch after one-vear the closmg the procedure occurs because of the lack of assets and because the debtor s admmstrator dldn't subrnlt the documents requested by art 2 1 "

ARTICLE 30 Law no 6.111995

W~thin 5 days since the registration of the debtor s claim or the expiration of the term allowed for the debtor to object the creditor's petition, or the rejection of the debtor's objection of this petition, the court will des~gnated, in the conditions of art 8 a syndlc judge hav~ng the tasks established under art Xo 10, In the conditions of art 17, an administrative receiver having the tasks laid down by 4t-t 18

Emergency Ordinance no 5811997

No applicable provision

Proposals for Modificat~on made by Romnn~an Banhruptcy Institute

The wording 'after the date of the debtor's pehhon reglstratlon, after the penod of hme 131 which the debtor can contest creditor s petition expires or after the date of the rqectlon of the debtor's comptarnt agamst this petition'wdI be replaced bv the wor&ng after the date when the openmg of the procedure was declared

ARGUMENTS rf it 1s necessary to be consistent m terms because of the introdurnon of the dec~sron for openrng the procedure along ulth d l the other actwit~es whch are to be acccrmplished m a cerlam penad of tme afrer the pronouncement or the cornurncabon ufths dec~sran

ARTICLE NO 30, COMMENTS

Satu Mare Tribunal no 1 (Romanian Banhru~tcv Institute)

"The text should be rnodlfied w ~ t h ' from the day of sentence delivery for openmg the procedure ' related with other procedures proposed for modifications "

I "The text should be from the day of cornmumcatlng to the Court the procedure eluc~dation " 1 Bucharest Tribunal no 1 (Roman~an Bankruptcy Inst~tute)

'We agree with RBI s evplanation for correlation w~th articles 25 26 and also other articles rn Law 64 "

Cluj Tr~bunal (Romanian Bankruptcy Inst~tute)

"RBI's explanations are appropriate for correlation with art 25 and 26 "

-

Maramures Tribunal (Duagreed D ~ f f Opin~on)

"If the art~cle no 25 will be modified and the syndic judge wll only be appotnted after stating insolvency into a tnal, opposrng the debtors to the~r creditors, then the artlcie no 30 should be abolished A part of article no 30 should be inserted in artlcle no 25 after ' appolnts the syndic judge ' The followtng specification should also be inserted in art No 25 ' Opemng the procedure stands for stating the cessation of payments "'

ARTICLE 38 Law no 6411995

The measures prov~ded in thls sectlon are general and shall be applled both in the cases of reorgan~zat~on and m those of judic~al l~qu~dat~on

Emergency Ordinance no 5811997

The measures stipulated in the current sectlon are enforced only in case of bankruptcy

PropasaIs for iVfod~fication made by Romanian Banhruptcy Institute

The measures strpuiaied m thls sectlon are general and are to be applled both in case of reorgammaon and l~qmdatron The actwitres promote& by the syn&c judge In rmplementmg the provisrons of this sectton are exempt of tax AXGUMENTS the s p & c judge cannot frle the request of annulment of fraud to the creditors' damage and the Tnbunal berng impeded to reestablrsh the order m the case of reorgmzafion compromises thls procedure because

The debtors are encouraged to use fiaud knomng that they can use the procedure of remgzmzauon whrchhas pnonty compared to the Irqwda~on, The financial resaurces that coufd result from annulment af fraudulent documents cannot: be used any: longer for carryrng by reorganrzation plan, The resources obtamed from the annulment of the transfers free of charge or hrghIy unbalanced or made mth the purpose of violat~ng the nghts of the creditors or to Eavor one cred~tor to the damage af the other eredrtor will not be used for the accomp~ishment of the reorgamahon pfm, The n g h w mnterests of the creditor cannot be defended agarnst ~fhctt acts of the debtor; It 1s mevpllcable why m the very case af rearganlzatron the judge is not allawed to rnamtam unfoldmg contracts, sifuatlons that pertams to the cancy~ng on of the actwty and ths 1s &one especially wrthm the procedure of reargamzat~on md Iess w r t b the procedure of Zrqurda~on.

- exempbon from sramp taxes for the mats called by the syndtc judge IS needed because h s resources are l~rmted and the procedure suffer ~f the tnals were mul l ed as not having the necessary stamps.

ARTICLE NO 38, COMMENTS

Satu Mare Tribunal no 1 (Emergency Ordmance 581 1997)

'The svndic judge's lack of resources brings the proposals for evemptmg the stamp taxation "

Prahova Trlbunal no 1 (Emergency Ordinance 581 1997)

The specificat~ons are only appropnate for bankruptcy cases "

Bucharest Tr~bunal no 1 (Rornan~an Bankruptcy Institute)

"RBI's explanat~ons pout a- e is appropriate But, concemng the exemption of stamp tavatlon a specification IS not necessary because Law 64 provides the sufficient information concerning t h ~ s matter The stamp taxation amounting to ROL 100,000 for the request under Law 64 regulations is payable onlv once time and concerns the whole procedure including other vanous requests that can interfere into procedure's process '

Cluj Trlbunal (RomanIan Bankruptcy Inshtute)

"RBI's proposltlon has the same m e m g as the ~rut~al stage of Law 64 It is not log~cal that these measures can only be taken into Liquldat~on cases and not m Reorgamzat~on It is obvious that these acts occurred to the damage of the debtor "

Maramures Trlbunal (Different Opmon)

"If we add to the text in E 0 581 1997 stamp tax exemption, the text shall be appropnate It is exaggerated to follow the procedure provided by the text for Reorgamzat~on cases It is assumed that if reorgaruzation is approved by the syndx judge, voted by the cred~tors and passed by the Tribunal, according to the conditions st~pulated m Law 64 then there are b ~ g chances for its goal to be acheved There is no pomt in gettmg lnvolved rnto debtor's problems, as long as the cred~tors are not mterested In t h ~ s matter "

ARTICLE 44 Law no 641995 1 0%

The synd~c judge, the creditors committee or the admin~strator mav recover from the th~rd partv the asset transferred by the debtor onlv of he has failed to pay the adequate value of the assets and he knew that the initial transfer could be relegated

Emergency Ord~nance no %/I997 I The synd~c-judge, the creditors board, the adrnin~strator or the liqu~dator w ~ l l be able to recover the assets or the kalue of the asset transferred bv the debtor from the third partv that acquired an asset from the bankrupt onlv ~f that th~rd party d ~ d not pay the respectwe asset value and knew that the ~ n ~ t ~ a l transfer could be cancelled

Proposals for Mod~fication made bv Roman~an Bankruptcv Inst~tute 93 65%

The syndic judge , the cred~tors board, the adm~nistrator of the fiqudator wiI1 be able to recover the assets or the value a t the asset transferred by the debtor from the thud party that acqu~ed an asset fiom the bankrupt only rf ha t thrd party d ~ d not pay the respective asset value and knew that the miual transfer could be cmcelled,

ARGUMENT: 1% rs necessary that the adrnmnistratm be rnentrwed among the persons wha can redeem gaods from the thrrd party that acquired good from the bankrupt for the cases in wkch he is appomted adrntmsrtat~r and a reorgstnrzatJ.on plan LS proposed

ARTICLE NO 44, COMMENTS

Satu Mare Tr~bunal no 1 (Roman~an Bankruptcy Inshtute)

"The proposals to modify are correct The adrninlstrator should be provided wth the ability to recover "

Prahova Tr~bunal no 1 (Emergency Ordinance 58/ 1997)

This proposition avoids the abuse in suing at law different types of cases and also creates stab~litv in transfemng assets between merchants "

Bucharest Tr~bunal no 1 (Emergency Tr1bunal58/ 1997)

"RBI's propositions are correct and proved ~n practice "

Clui Tribunal (Romanian Bankru~tcv Institute)

' The tevt should be correlated with the modification of measures provided by art 38 For Reorganization measures, stipulated in the third part should be taken These measures bnng the opportunity of hav~ng an administrator responsibIe for the same tasks like the Liquidator m liquidat~on cases "

Maramures Trlbunal @lsagrees/ Different Opmion)

"The tevt provlded by the law is confusing and the terms used are not appropnate, this makes inapplicable the intention of the nitl la tor of the law that is to eliminate the fraud that is introduced by the debtor ln prejudicing the creditors It is not clear whom the thrd party is, when a good is sold, the buyer is normally the receiver of the good If the buver sells as weil, the second buyer becomes the thud party The latest if fair, and having bought movable assets is protected by art 1909 in Civll Code 'Corresponding value' is rather vague and can be related to the evaluation pnce, the market pnce or the total value that has not been depreciated A better idea would be to express "senous pnce" according to art 1303 in Civil Code "

ARTICLE 46-Par (I), (2) and (5) . . . . Law no 6411995 (1) With a vlew to augmenting as much as possible the value of the debtor's property,

the synd~c judge may assume or turn down any contract, includmg the contracts extending credits, rentals not exp~red or other long-term contracts, as long as these contracts are not completely or considerably executed bv all the parties involved The synd~c judge should answer, in 30 days the request of the other party that he should choose either to assume or to repudiate the contract, in the absence of such an answer the syndic j ~ d g e mill no longer be able to ask for the carrying out of the contract wh~ch will be deemed rejected

(2) In case of rescission of a contract the damaged party may bnng an actlon for compensation from the debtor s propertv

(5) A work contract, or renting the as tenant, of a buildmg may be rejected onlv in observance of the terms of legal pnor notlce Contract prior notlce terms, exceeding legal ones will not be observed

Emergency Ordinance no 5811997 ( I ) Aiming for the mavimum Increase ot the debtor's propem value the syndic judge

can malntam or annul anv contract, ~ncluding the contracts of evtending the cred~ts, on gomg lease or other long-term contracts as long as the contracts haven't been entirely or mostly executed by all the partles involved The syndic-judge shall answer w i t h 30 days, to a notifications of the party asklng for the responsibilitv to choose to maintain or to annul the contract, if there is no such answer, the syndic judge w11 not be able to ask for the execution of the contract, given that it is considered as annulled

(2) In the case of annulment of the contract, an action pertamng to damages can be enforced by the party agamst the debtor

(3) An employment or lease contract in the case of the lessee can be annulled only if the contracts comply with the legal terms for the pnor notice

Propusals for Modrficatron made by Romanian Bankruptcy Znshtute (1) & order to maxlmze the d u e of the debtors' assets, the &nd~c judge can matntaur

ar reject any cantract, mcludmg those for credit extensions, mfoldmg rental eontracts or other long term contracts, as long as these contracts wll not have been ent~rely or substmtdly caned out by all pmes ~nvcdved The syndic judge has to answer, wthm 36 days to a notdicahon from the eo-contractor, by which he is asked to choose between mamtamng and rejechng the contract, In case of no answer, the judge tvlll not be able to ask the execution of the contract, tius bang cansrdered rqected

(2) In case a: contract rs rejected, the co-cantractor, agarnst the debtor can lmtlate an action fur damage compensatum

(5) A work contract or a rental contract as tenant can be rejected only observmg the legal nohee terms

ARGWMENTS the same srs those for art 10 let E - maintamng the terrmnology for par 3 of art 46

ARTICLE NO 46, PAR 1,2, AND 5, COMMENTS

Satu Mare Tribunal no 1 (Romanian Bankruptcy Inshtute)

"The followmg modlficat~on IS appropnate ' To observe any contract ' instead of to cancel any contract "'

Brada Tr~bunal no 5 (RomanIan Bankruptcy Inst~tute)

'The law should specify what 'contract rejection' means "

Prahova Trlbunal no 1 (Romanian Bankruptcy Institute)

'Speeds up the cases solwng '

Bucharest Tnbunal no 1 (Emergency Ordmance 58/ 1997)

'RBI's propositions are not appropnate for the reasons specified in art No 10 "

Bucharest Trlbunal no 3 (Roman~an Bankruptcy Inst~tute)

"Same comments as for art No 10 "

Gorj Tribunal (Dlsagreesl D~fferent Opinlon)

"Same comments as for art No 10 '

Constanta Tribunal (Roman~an Bankruptcy Institute)

"RBI's explanations are correct only m case that 'rejechon' means the annulment of contracts' effects dunng the procedure "

Maramures Tribunal (Disagrees/ D~fferent Op~nion)

The text has only theoretical Importance (value), at least for the first h e , par 1 Talung into account the syndic judge's responsibility to glve answers to the contractors notifications, concerning the contract signed wth the debtor - whether the contract is m force or not - the proposltlons st~pulated by the text are very confusing As far as, art No 10 provldes to the syndic judge the nght to 'reject' or denunciate a contract m process, and the syndlc judge doesn't make use of t h ~ s nght, there is no point in specifymg what the syndic judge should do in case he recelves a letter from a business partner The partner knows that the debtor is following the Liquldatlon procedures and 1s interested in, for mstance, a contract signed w t h this one T h ~ s proves an excesswe regulation of the case "

ARTICLE 52 Law no 641995

The svndic judge or the administrator may not assume the carrying out of a contract in whch the debtor agreed to perform certain special specialized serhces, evcept when the cred~tor IS agreeable and accepts the services to be performed by a person designated bv the svndic judge or the administrator

Emergency Ordinance no 58/1997

The syndic judge or the hquidator can annul a contract according to whlch the debtor comrn~tted hlmself to provide certain spec~dized or stnctlv private servlces evcept for the case the creditor agrees to be prov~ded bv an indiv~dual appointed bv the syndic-judge and the hquidator Proposals for iMo&ficatlon made by Romanian Bankruptcy Institute

The syndrc judge can reject a contract by wkch the debtor abllged hunself to accomplrsh certam speclalrzed or stnctiy private servrces, except the case when the cred~tor accepts the semces to be supplled by a person appointed by the syndie judge

ARGUMENT the inlt~atwe of rnarntsunmg or rejectmg contracts IS the attRBIute o f the syndic judge

ARTICLE NO 52, COMMENTS

Satu &lare Trlbunal no 1 (Roman~an Bankruptcy Institute)

"The syndlc judge IS the only one who can art~culate a decis~on concerning a contract There are no guarantees that the L~qu~dator can replace the synd~c judge m some of his decis~ons "

Prahova Tribunal no 1 (Romanian Bankruptcy Inst~tute)

"Speeds up the cases solvmg "

Bucharest Tr~bunal no 1 (Emergency Ordmance 581 1997)

"We don't agree mth RBI's proposals because on one hand, the syndlc judge has the abll~ty to glve to the Liqu~dator the nght of appealing the contracts, and on the other hand, m h s case are mvolved the reasons shown to art 10, par I , polnt e "

Cluj Tribunal (RomanIan Bankruptcy Institute)

"Modificat~ons upon the terms 'reject~on' and ' cancellation' are correct "

I Gorj Tribunal (Dlsagreesl Different Opin~on)

I "We have a different opinlon takmg m consideration the evplanations m articles no 10 and no 46 "

Maramures Tr~bunal (Disagrees1 Different Opmon)

"The text IS confusing and useless " It is hard for us to understand how a comrnerc~al company that IS an abstract ent~ty can provlde 'personal' semces For, instance, ~f the debtor has to accompl~sh an unfimshed bu~ldmg somebody else should be asked to fi~llsh lt m h s place In our opimon, the concern for the debtor IS exaggerated in thts case too "

ARTICLE 60

Law no 6411995 On the request of the adrnm~strator, of the debtor of the representatwe of the creditors, or eu offic~o, on the bas~s of the report of the svndlc judge, the court may rule anytlme, the total or part~al sale or judic~ary llqu~dat~on of the debtor s wealth, mot~vated by the fa~lure to carry out the reorgamzation plan

Emergency Ordinance no 5811997

Proposals for Modlfieatron made bv Romanian Bankruptcy hstltute

At the request of the admrmstrator, of the debtor , of the cred~tors board or ex off~cio, accordmg to the report of the sbnd~c judge the Tribunal can dec~de at any tune the openmg of the hqmdat~on procedure motmated by non-performance of the reorganrzat~on plan

I ARGUMENT nan-performtng of the plan 1s to be sanc~oned unmedrateIy and the l~qurdatran procedure for meetmg the cxed~tors mterest 1s to be opened

ARTICLE NO 60, COMMENTS

Olt Tr~bunal no 1 (Romanmn Bankruptcy Inst~tute)

T h ~ s permanent THREAT w11 dlsc~pl~ne the debtor and also w11 make h ~ m get totally involved w~th task completion and debt's payment "

Satu Mare Tr~bunal (Roman~an Bankruptcy Institute)

'The maln task IS cred~tor's Interest "

Calarasi Tr~bunal no 1 (Romanian Bankruptcy Institute)

' The RBI's proposals as well as the evplanat~ons are approprlate but non- l~qu~dat~on of the debtor's assets leaves the doors open for negatwe influences upon the macro - comrnerc~al svstem "

' Timis Tribunal (Dsagreesi D ~ f f Opmlon) i

I "Art No 60 ~n Law6411 995 was abohshed by E 0 5811 997 " I

Bucharest Tribunal no 1 (Law 64/ 1995)

"We don't agree w~th RBI's proposltlons for the correlat~on wlth art No 2 There IS

no reason to ehmmate the ~ntermed~ary strategy that conslstmg m sellmg debtor's assets (totally or part~ally) In t h ~ s case the effects are different from the effects in bankruptcy cases, cons~denng that by sellmg the assets, the cred~tor s Interest can be ach~eved "

"Art no 60 In Law 6411995 was abol~shed by E 0 5811997 But, even the last one st~pulates penalties for not fulfillment of Reorgamzat~on plan The text m the abol~shed art 60 has the same conslstency wlth the specificat~ons prov~ded by art, no 68 that refers to the same sltuatlon Mod~fjmg art No 68 by E 0

1 58 creates the uossrb~l~tv of ~ena l t~es m case the ~ l a n IS not comul~ed wth "

Maramures Tribunal (Romanian Bankruptcy Inshtute)

'There IS no pomt m speclfy~ng ' total or partlal' selllng of assets, because ~t IS

obvious that dunng the Llqu~datlon procedures only the assets necessary for ths procedure's fulfillment shall be sold "

(2)Any plan (scheme) accepted shall be (b)- communicate to all the know creditors, the debtor and all the associated to the shareholders

ARTICLE 62-Addendum 2, letter b+ Addendum 4 Law no 6411995

Emergency Ordinance no 5811997

0%

At the request of the admmrstratot, of the debtor, or the creditors board ex officlo, accordrng to the report of the syndrc judge, the Tribunal can dec~de at any hme the openrng of the I~qudatron procedure motwated bv non-performance of reorganrzat~on

Proposals for Mod~fication made by Rornanmn Bankruptcy Institute

ARGUMENT. non-perfomung of the plan IS to be sanct~oned immed~ateiy and the hqu~datron procedure for meetrng the credrtors' interests 1s to be opened

100%

ARTICLE NO 62, ADDENDUM 2, LETTER b + ADDENDUM 4 COMMENTS

Prahova Tr~bunal no 1 (Romanian Bankru~tcv Institute)

'It IS appropnate m order to avoid expenses and speed up measures to be taken "

Bucharest Tribunal no 1 (Romanian Bankruptcy Institute)

"Some of RBI's propositions are appropnate, but there are also propositions that should be more restnctive For mstance, the requests for stipulating all the conditions, tenns or motivations should be more restnctive "

Clur Tribunal (Romanian Bankru~tcv Institute)

'RBI's propositions are correct but we still find exaggerated the aspect of informing all the creditors and shareholders about the plan Some of the cases can have thousands of creditors and the informing of all this could block (stop) the procedure The regulations concernmg the syndic judge's act~vlty are not balanced If the Tribunal passes the plan then the same Trlbunal should pass the rejection decision too "

Maramures Trlbunal (Romanian Bankruptcy Inshtute)

'The Creditors Cornrmttee IS a collectwe entlty without any managmg organizational structure that can recelve information in the name of all creditors T h ~ s is why we th~& that for ail the credrtors havmg declared their receivables should be Informed upon the plan especially those that w l l vote for Tnbunal's c o ~ ~ n n a t i o n of the plan accordlng wth art No 60 in Law 644995 "

ARTICLE 63 Law no 6411995

(I) No later than 30 days after the notification of the plan, on conformity with art 62, par (2), letter b) the court w11 hold a meeting with the prmleged creditors and the IOU creditors The debtor, the syndic judge and the administrator will be summoned in wnting The creditors with subordinated debts, the shareholders and the associates wd1 participate in the meetmg, but may vote on the scheme only if under it they are granted a less favorable treatment than the granted in the case of judicial l~quidation

(2) If the syndic judge accepts several schemes, all will be put to vote in the same court session

(3) Only the creditors whose debts are not contested shall be entitled to vote on the scheme

(4) The following categones of creditors will vote separately, (a) - each creditor whose secure debt exceeds of the value of all the liabilities on the

debtor's wealth, (b) - any other debtors with secured debts, (c) - the creditors with pnontles mentioned under Art 107,2) and 4), (d) - IOU creditors (e) - If they are entitled to vote as per par (I) - the shareholders or the debtor's associates, - each category of creditors with subordinated debts, m conformity wth the

provrsions under Art 108 (5) At the begimng of the voting procedure, the court will not@ the creditors present

on the valid votes, received from the creditors in m t m g (6) A scheme will be deemed accepted by a category of cred~tors that n not

disadvantaged if its members are to recelve, on the date the scheme is confirmed, less than the full equivalent of their debts of or their rights

Emergency Ordinance no 5811997

No applicable provision

Proposals for Modlficatxon made by Roman~an Bankruptcy Inmtute

The notmn of credaclr wrth subordmated wdI be eltmlnated &om the arhcfe for the sake cr. comsfency wrth the abmgatmn of art f O&

ARTICLE NO 63, COMMENTS

Bucharest Tr~bunal no 1 (Romanian Bankruptcy Institute)

"On one hand we agree wth RBI's proposals to replace the term 'creditor w~th subordinated debts' in view of correlat~on with the abolit~on of art 108, but on the other hand we d~sagree with the concept formulated in the art 63 par 4, point c, concerning the reasons stipulated m the article no 107 "

Constanta Tribunal (Roman~an Bankruptcy Institute)

We agree, with RBI's proposals, takmg Into account the abol~tion oi- art 107 "

Maramures Tribunal (D~sagreesl D~fferent Opin~on)

The artlcle should be completelv reviewed because the actual stage of it is iIlog~cal There is no point in categormng the cred~tors what it counts is the debts' ehg~bilitv X list of pnonties and importance has sense tor the price dlstRB1utlon stage that IS

not included In the Reorgaruzation procedures All creditors should have the same nght to vote The I00 000 ROL amount that goes to the unsecured creditors should be the same amount that goes to state or the secured creditors The mam condition to confirm the plan IS to be voted by at least '/2 of all creditors that have the~r debts admitted to be checked It is obvious that the syndic judges' dec~sion will not be censored by the Court at the requests of the persons that are Interested in t h ~ s matter "

(1) If the debtor declares hls intention to reorganize his activlty in the cond~tions of Art 21, par (1) letter f) and then the reorganization plan is confirmed by the court in the condit~ons of Art 64, he will be able to carry on hls actlvity and administer his wealth under the supervision of the syndic judge untll the court rules on solid grounds, that the reorganizatron should cease and the lrquidatlon oi the debtor's wealth be pursued

Emergency Ordinance no 5811997

(3) the accounts receivable to the state budget and the soclal securities are taken into conslderatlon on a temporary basis wthrn the amount reported by the debtor

Proposals for Modification made by Romanian Bankruptcy Institute

ART 67 par (3) wlI1 have the folbwmg content The debts towards the state budget and socral msurance budget are provisionally taken into considemtian, m the quantum declared by the debtor They can be meddled at the request of the appropnate financ~al bodes

ARGUMENTS: although the provmanal character IS rnentroned, the pruvrslun does naf state exactly whether th~s modtficatron can be made or not or who 1s enQt1ed to make ~ t , whch em lead to coduslon

ARTICLE 67, Addendum I-Par (3) Law no 6411995 0 O/O

-

-

ARTICLE NO 67, ADDENDUM 1 PAR 3, COMMENTS

Olt Tnbunal no 1 (Roman~an Bankruptcy Institute)

'Art 75, par 1 should stipulate that the request to prevent the debtor from operating h ~ s activity could also be made by the syndlc judge, a gurde of the procedure We do not understand the reason why the syndic judge doesn't have thls nght as long

as he is the one that administrates the procedure and he has a direct and permanent connecbon w t h the parties involved in the tnal "

Satu iMare Tr~bunal no 1 (Romanian Bankruptcy Institute)

'Modifications suggested according to the sense of proposals are needed with an appropnate explanation for art No 107 '

Bucharest Tribunal no 1 (Emergency Ordinance 58/ 1997)

RBI's explanation that was made in order to sustain the proposal is confusing The confusions are mainly made between the administration nght as provided by art no 73 and the managrng right provided by art No 75 but also concerning Reorganization and Bankruptcy that are distinctly regulated The additronal evplanatlon made by RBI 1s not necessary "

Bucharest Tribunal no 3 (Emer~encv Ordinance 58/ 199n

"The cornparatwe analysis of art No 73 and art no 75 stipulates that the debtor's nght to admmster h s assets can be eliminated in two d~fferent situations

1 As an effect prov~ded by Law or as a result of the debtors7 request for the hquidat~on procedure that is unconditional in its legal terms, established by the debtor and also for the situation when it is rejected at the debtor's objection

2 In the case of the Tnbunal's declsion according to condit~ons st~puiated in art No 75

We also conslder RBI's proposals appropnate for art No 13 and 21 in Law 6411995 to be modified "

Maramures Tribunal (DlsagreesLDifferent Opm~on)

"Art No 63 1s not well placed ln section no 5 concernmg Reorgamzation, ths meamng that measures stipulated m the text can only be applled in reorgamzatlon cases, whlch doesn't make sense The measures should be included in a d~fferent sectlon called ' measures to be taken by the synd~c judge after the insolvency state was declared7 and they are only general measures that can be cancelled by the syndic judge in case they are not actual anymore The safety measures to be taken, for instance, bank accounts or correspondence exemption should be gathered together These measures are onlv specified for Liqu~dat~on cases, art No 8 1 m Law After safety measures were gathered and counted, the text should specify that these measures are to be taken immediateiv after the synd~c judges' appointment "

Law no 6411995

Art 67 1 - (1) Within 30 days after the procedure of reorganlzation starts, all credltors that have accounts rece~vable pnor to the date when payments cease, evcept for the employees, shall submlt the statement of rece~vables to the credltors' meeting (2) The statement of rece~vables should be made even ~f there is no spec~fic title for the rece~vables (3) The accounts rece~vable to the state budget and the soc~al securlties are taken Into

consideration on a temporary bass w~thln the amount reported by the debtor Art 67 2 - (1) After the reorgannation procedure starts, ~t IS forb~dden to the members of the debtor's management under penalty of annulment, to alienate wlthout court's approval, shares or soclal parts, m compliance with par (I), mcluded in the Shareholders Register or the accounts registered electronically

Emergency Ordinance no 5811997 Art -(I) Withm 30 days aiter the procedure of reorganlzation starts, all creditors that have accounts rece~vable pnor to the date when payments cease evcept for the emplovees, shall submlt the statement of receivables to the creditors meetlng (2)The statement must be made even d there is no specific tltle for the rece~vables (3) The accounts rece~vable to the state budget and the soclal securlties are taken into

consideration on a temporarv basls wthin the amount reported by the debtor Art 67 2 - (1) After the reorganlzatlon procedure starts, ~t IS forbidden to the members of the debtor's management, under penalty of annulment, to alrnate wthout court's approval, shares or soc~al parts owned by the debtor that IS the object of the current procedure (2) The syndlc judge or the admln~strator shall decide upon blockage of shares and soc~al parts m comphance w~th par 1 Included Shareholders' reglster or the accounts registered electromcally

k t 6-73 In the absence of a reorgmzabon pian, confirmed by the Tnbunal under the cond~tmns of art. 64, the debtor, a creditor, the cred~tors board, the &amber of commerce and mdustry ar the syndx judge can file a clam mth the Tnbund to: suspend the debtor's

Proposals far Mod~ficabon made by Romaman Bankruptcy Institute 93 10%

fight to deveIop hrs actrvrty Disagreernifferent Opin~on 0%

ARTICLE 67, ADDENDUM 3, COMMENTS

Satu Mare Tr~bunal (Roman~an Bankruptcy Institute)

"As far as the evaluation of the debts IS taken into account even ~f they are specified as 'temporary' the law should stipulate the posslbil~ty to convert those debts Into permanent debts "

Calaras~ Tr~bunal no 1 (RomanIan Bankruptcy Inst~tute)

"RBI's explanations are appropnate, but the insurance company s role should be taken Into account "

Prahova Tr~bunal no 1 (Roman~an Bankruptcy Institute

'RBI's proposals are appropnate for avoidlng the confusing sltuatlon and an accurate evaluat~on of the debts "

I Prahova Tr~bunal no 2 (Daagreesl D~fferent Opin~on)

I "The declaration of untitled debts makes the debtor unable to make use of the Common Law procedure for proving the creditor's debts towards h ~ m "

Bucharest Tr~bunal no 1 (Emerrrencv Ordmance 581 1997)

'The actual stages of Law 64/1995 cannot prove the confusion brought up by RBI Also, RBI's proposal concerning 'financial corresponding orgamzations' n not correct, its spec~fication is available only for the debts of budgetary type that are collected by State Budget and not for the debts related to Soclal Secunty Budget "

Constanta Tr~bunal (Emergency Ordmance 581 1997)

"All cred~tor debts' amounts should be known and updated at the date of drawng the tables "

Maramures Tnbunal (DisagreesDlfferent Opmion)

"The text provided by E 0 58/1997 should be totally ellrmnated because lt is senseless If the Reorganizatlon procedure is open, it means that we have a plan already confirmed by the Court, and the plan can only be drawn takmg into account the votes provided by the creditors with venfied and adm~tted debts If the debts are venfied lt means that they were voted The debt declaration, the deposit condlt~ons and terms should alI be u t a n l y stipulated for both cases, Reorganizatlon and Liquidat~on If we don't know who the creditors are we cannot be allowed to apply any of the two procedures RBI's proposals are appropnate for avoidmg the confusing sltuatlon and an accurate evaluation of the debts "

ARTICLE 49-Par 2 Law no 641995

(3) The creditors, the debtor, and the tenitonal Chamber of Commerce may contest, wthm 15 days, the decis~on of the syndic-judge to contlnue the actlvitv of the debtor In this case, the court will make an urgent ruling in a session In which any interested party may part~clpate If the court approves the continuation of the debtor s actlvity, it mav impose restrictions and conditions requested by the creditors or the debtor

Emergency Ordmance no 58/1997

No applicable provision

Proposals for Modlficatron made by Romanian Bankruptcy Insatute

(2) The creditors, the debtor, and the terntorla1 Chamber of Commerce may contest, svltfiln 15 davs, the decmon of the syndrc-judge to contrnue the actiwty of the debtor In thxs cwe, the court ~ 1 1 1 make an urgent rulrng In a session in whrch any mterested party may participate If the court approves the contmuatlon of the debtor s actlvity ~t mav Impose restnctlons and condrtlons requested by the credxtors or the debtor

DisagreeD~fferent Opinion

ARTICLE NO 69 PAR 2, COMMENTS

Satu lMare Trrbunal no 1 (Romanian Bankruptcy Inst~tute)

"Our proposal IS that the syndic judge should not have the ability to dec~de if the debtor's activ~ty will be continued or not, t h ~ s should be exclusively the Tnbunal's ability and in case of decision disagreement the appeal shall be used "

Bucharest Tr~bunnl no 1 (Romannn Bankruptcy Inst~tute)

"RBI's proposals are correct, they provide procedure's cauac~tv of solving cases in a v e n short penod of time "

Mararnures Tr~bunal (D~sagrees/Drfferent Opinion)

"We propose the following tevt 'The Tnbunal should approve the evecution of Reorganization penod prev~ouslv fixed at syndic judges' proposal and with the notification of the creditors that declared their debts The court shall improve the syndic judges decision either eu oficio, or at creditors' request if their main task is an effectwe activlty and they are also interested Into a better supervision of debtors activity durmg the extension of Reorgamzation Creditors should be provided w t h the nght to bring amendments to the reorgamzation procedure as they prove to have knowledge that the syndic judge does not have Dunng the reorgamzation penod the debtors should be obliged to present the balance sheet monthly as minlmum information about their financ~al situation "

ARTICLE 86 Par 2 Law no 6411995

The debts will not be subject to verification which denve from taxes, penal or contraventional fines owned to the State or the local budget and whlch are subject to speclfic laws

Emergency Ordmance no 58/1997

Proposals for kXod~ficzhon made by Romanian Bankruptcy InsOtute

4RT 86 PAR 2 w111 be abrogated

ARGUMENT the pnnclpfe of the nght to appeal to justice and to self-defense 1s violated

ARTICLE NO 86, PAR 2, COMMENTS

Satu Mare Trlbunal (Roman~an Bankruptcy Inst~tute)

"The nght to be defended or to address to the court should not be violated "

Calaras~ Tr~bunal no 1 (Law 641 1995)

'The nght of defense is provided by law and prov~des the procedure s capaciw to solve the cases in a short penod of time "

Bucharest Tribunal no 1 (Law 641 1995)

The nght of defense and the nght to address to the Court are not violated because all the laws relevant to the case are specified m art No 86, par 2 so that anv person interested in laws7 regulatrons can make use of them "

Constanta Trlbunal (Roman~an Bankruptcy Inst~tute)

"The RBI's proposals eliminate the control of jundicai type upon debts "

"The i m t d stage of the law is correct because it send us to d~fferent laws If we abol~sh this one than, we don't take into consideration Law 105J1997 that refers at objections, and especially objections of budgetary type The type of mformat~on that send us to another article should also be stipulated in art 86, par 2, and thls way other modifications are not necessary to be done The stipulation of a text parallel in meaning w t h art 105 are dlegal "

ARTICLE 87 Law no 6411995 6 90% No Interest or evpendmre may be added to the unsecured parts of the secured debts, as of the registration of the claim

Emergency Ordmance no 5811997

No appl~cable provision 1 Proposals for Mod~ficat~on made by Romanian. Bankruptcy Inshtute 91 38%

Yo interest or eupendrbre wrll be added to non-guaranteed debts or to non-guaranteed parts of the guaranteed debts, s m r n g the day when the sentence of openrng the procedure IS pronounced

ARGUMENTS tn rts mrtral form .the text ts open to taterpretatrons Accordtng to the worchng it seems that the legislator referred to the requests of depsrtmg the debt, as provtded by art 84, although most stages af the procedure depend an the moment in whlch It ls considered opened, - Eststbl~shrng a unrque moment untrl whlch the commercial Interests are pad, makes it

easy to calculate these Interests and check the debts the old regulation of art 718of commerc~al Code H an argument as well DisagreeD~fferent Opln~on 1 72%

ARTICLE NO 87, COMMENTS

Olt Tr~bunal no 1 (D~sagrees/ D~fferent Opmon) I ' Starting with the request reglstratlon day, there are no Interest rates or expenses that can be added to the existing debts We have hilanous smations - for instance for a banking credit valuing 2,000,000,000 ROL the interest rate IS 5,000,000 000 ROL The tevt encourages the lack of actlvity of the banks Law protects banks anyway Banks should take immediate action as soon as they notlce that the debtor defaults on paying back hls debts Thus the Reorganizat~on plan becomes effic~ent, it is hard to be comphed m the situation of a contmuous interest rate flow, as banks mainly operate to get interest rates "

Satu Mare Tr~bunal no 1 (Romanian Banhruptcy Inst~tute)

The correct way IS to maintain the terms from the date of passing the sentence that states the openmg of the procedure "

Calarasl Tribunal no 1 (Roman~an Bankruptcy Inst~tute)

"We find RBI's explanations appropnate but we add that the pnnciple of responsibility should be taken Into cons~deration "

Prahova Tr~bunal no 1 (Law 641 1995)

'It IS very necessary and also very important for the debtor to be informed about the value of debts, he could pay some of them avoidmg the uncertainty of the situation "

Bucharest Tribunal no 1 (RomanIan Bankruptcy Institute)

'RBI's euplanat~ons are appropnate and venfied In practice The same aspects should be regulated for the interest rates related to the secured debts It should be d~stinctively mentioned when the standard regulations are applied to the creditors in order to stop the expenses and also the interest rates reglstratlon in their own ev~dence "

Maramures Tr~bunal (Law 64/ 1995)

"The lmt~al tevt rs not appropnate The modlficatlon proposed doesn't take Into cons~derabon the fact that the declarat~on concerning the debts should be stated after opening the procedure, this period of time doesn't have to be a short one and the interest rates are st111 available "

ARTICLE NO 87, COMMENTS

Cluj Tr~bunal (Romanian Bankruptcy Institute)

"It IS necessary to regulate the Interest rates, the penalties, or other expenses In the sense of clanfylng all these aspects It 1s not clear enough ~f the text only In Reorgamzation cases, or Liqu~datlon cases, or both There are d~fferent oplnlons that prove that article no 57 can only be apphed for Liquidation procedures The mterpretation of the law IS not equitable because measures should be taken to stop the expenses in Reorganization case too "

ARTICLE 95 Law no 641995

When all the contestations of the debts have been resolved, the syndic judge w~l l record m court and w~l l have posted at the court's entrance a table w th all the debtor s I~abrlities, showmg the sum, the pnor~ty and the situat~on-secured or unsecured - of each debt

Emergency Ordmance no 5811997

Proposals for Modtfieatron made by Romanlan Bankruptcy fnstltute

A new paragraph wll be rntrocfuced (21, w h ~ h wI1 have the followng content 'The final table of adpstmenrs has the legal power of a w r ~ t of executmn "

ARGUMENT rt rs necessary that the table of adjustment be observed bv everybodv w~thout. other formalltles

ARTICLE NO 95, COMMENTS

Satu Mare Tribunal no 1 (Law 641 1995)

"The proposals are appropnate but in our opinion a new h e should be mserted T h ~ s lme concerns the table for definitive distRBIut~on cannot have the jurid~cal power of an wt of execution, ma~nly because ~t doesn't provlde the conditions requested in the Code for Civll procedures '

Calarasi Tribunal (Roman~an Bankruptcy Institute)

In our opinlon the hlfillment of the table should be compulsory '

Bucharest Tribunal no 1 (Roman~an Bankruptcy Institute)

If the meaning for table for definitive d~stRBIution' is eupla~ned, than the proposal is appropnate In its practical aspects Or to put thls Into another way, our question IS

'Is there anv possibility for the table to be drew for the indefinite dlstRBIut~on that can be objected and that can become definitive after sorting out the objectlon7' Constanta Tr~bunal (Law 641 1995)

"Art 95 should be completed with the specificat~ons upon the jundlcal power of t h ~ s table, if there is any possibility to be objected, and the spec~fication concernmg the form of the table- whether is definitive or not "

Maramures Tr~bunal (Law 641 1995)

"The table for d~stRBIut~on is also ment~oned in art 105, in sense of payment for distRBIution The statement of thls table is for informmg the cred~tors upon the declared debts for the objection cases The objection can be announced until the end of the procedure T h ~ s statement should verified by the synd~c judge and only than stated for all the creditors The s~mple l~sting of the debt value is not enough for the cred~tors that live in towns different to the one where the Tnbunal is, because they cannot be Informed m tlme about t h ~ s listing procedure "

ARTICLE 106 Law no 641995

No applicable provision

Emergency Ordinance no 5811997

The budgetary receivables, ~ncluding taxes, dut~es, contRBIutions, and other amounts representing publ~c Incomes - according to Law 7 X 996 regarding publlc finances - are tvamlned and completed in compliance wlth Governmental Ordinance 1111996 regarding execution of budgetary receivables, approved and adjusted by Law 10811 996

Proposals for Mad~ficatron made by Roman~an Bankruptcy Institute

ART. 106 will be abrogated

ARGUMENTS -pant 44 of O U G 58fI997 establishes that the momtonng and xeatlon of budgetary debts be accomplished accordrng to the G Q no 1 I/f996, two parallel are created one for the creanon of budgetary debts accordmg to G 0 I111996 md other one regulated bv Law 641995 concerning the same debtor thmg tvhch is unacceptable takrng Into account the coqunctlon character of f i e barzknrptcy procedure,

7%; credtors i&Aved m the grocedure regdated by Law 64/1995 &e n i t gwen my chance, because a 1 debtor's assets wIl be exhausted by pe r fonng the budgetary debts, b e f o ~ they can receive the approprrate sums, as the procedure stipulated by G O 1 If1996 IS much faster than the coliecttue one regulated by Caw64jl995 The h d k s for: enforced execution of budgetary debts wll not take mto accaunt the measures of dlsmissmg or enforced executmn taken by the syndtc judge, whch contradicts the very nghtfbl order, The procedure of budgetary debts cteatron completeiy paralyses anv chance of mouery of tk debtor's act~vity because reorgarmatrun IS based on the conservation and enlargement of debtor's fortune whfc the bodm for financxal executron empty the content of the debtor's f o m e Art I06 contradicts even the proursions of G O 1 If1996 respectively art 100 whch stplates tIze adjautllmg of the term of regulation of the nght to require the enforced payment af a budgetary debt m cases of adjourntng the edorced payment stipulated by law among which that whch i s st~pufated by art 3 1 m Law &If1995 and respectwe-ly art- 102 of G 0 1 £/I996 which s~pulates the poss~brhty of the financial eyecuimn body to ask the openrng of the xeorganmt~on w I~qmdatmn procedure with the notlce of the Mxnrstry of Finance The work of the syndic judge and of the Tnbund IS useless and Law 6/f995 1s rmpllcdy abrogated by p a w 44 m E 0 58k1997

ARTICLE NO 106, COMMENTS

Satu Mare Tr~bunal no 1 (Roman~an Bankruptcy Institute)

"The case doesn't requlre two different procedures in parallel The tevt shall be abolished "

Tlmis Tribunal (Law 64/ 1995)

"There is a spec~al procedure for recovenng budgetary habillties '

Bucharest Tr~bunal no 1 (Law 6 4 1995)

"The debt's recovery shall be made using a special procedure descRBIed bv E 0 581 1997 The modifications upon thls tevt are not appropnate Although the procedure provided by Law 6411995 is forced challengmg in nature, the initiator of the law could create exceptions in the case of some debts, such as budget related The procedure provided by E 0 1111996 seems more efficient that the one prov~ded by Law 6411 995 Law 641 1995 can only become more appropnate by being adjusted to the required standards "

Cluj Tr~bunal (Romanian Bankruptcy Inshtute)

"The adjustment made to art No 106 in Law 41 1995 provlded by E 0 58/1997 is nonsense To the explanations made by RBI one can attach o lot more different evplanations Evecut~ng procedure as provided by Law6411995 it w forced and collect~ve and, it doesn't allow any other possib~hty"

Maramures Tr~bunal (Romanian Bankruptcy Institute)

"The tevt provided by E 0 for art 106 is useless and conhsing, although we don't consider that this text was meant to fail to observe Bankruptcy regulat~ons "

ARTICLE 107 Law no 6411995

Emergency Ord~nance no 5811997

The unsecured rece~vables shall be paid both in case of reorganization and Itquidatton of some assets of the debtor's property to a plan, and m the case of bankruptcy, as follows

a duttes stamps and any other evecut~on evpenses due to the procedure set up In the current law

b Remunerat~on of ~ndtv~duals hired under the provmons of Art 9, 17 and 15, also considering the provisions of Art 65, par-(3)

c cred~ts opened wth a bank w~th the due interest of evpenses d ~f the debtor is an tndtvidual, the amounts necessary to support him and h ~ s

family as set up by the court, e the receivables result~ng from contracts over at most 6 months pnor to the

start of the procedure, f the amounts due to th~rd parties for food and rent over at most 6 months to the

start of the procedure, g expenses incurred durmg the procedure necessary to preserve and administer

the assets oi the debtor propertv, h Debts resultmg from conttnuatton of debtor's act~vtty, as sttpulated In Art 69, I Other unsecured rece~vables

Proposals for Modrficilt~on made by Roman~anr Bankruptcy Institute

Axt I 07 w ~ I l have the falfowmg content 'The debts wI1 be paid, both accordrng to the reorgmzatmn plan and I;n case of Irquidatron, m the followmg order I Taxes, stamps, or any other expenses w~th the execuhan due to the procedure

msbtuted by the present law, 2. Debts guaranteed by pIedge or mortgage (tf these guarantees were conshtuted before

the budgetary debts) upon some af debtar's assets 5 the budgetary debts representmg taxes, con&33Iur~ons, fmes and other pubfic

mcomes, 4 The sums owned bv the debtor to thxd pastles, as food and maxntenance for 6 rnanths

before the tmQator of the procedure as well as f ~ r the mamtenance of the debtox as a natural enbty and of h s fm~ly, the w a - they were gwen by the Tnbunaf

5 Debts ansmg fiom the work contracts over a penod of ttme of at most 6 months pnor to the procedure

5 Bank cred~ts wrth theu mntaests and due expenses gwen by cornparues dunng the reorgantzatmn penod

7 Debts msmg from the conbnuatmn of the debtor's actrvlty In case of reoz~,anr;zatron 8 Other unsecured debts 9 Assocratxons and shahalders

Disagreemifferent Opinion

ARTICLE NO 107, COMMENTS

Satu Mare Tr~bunai no 1 (Emergency Ordinance no 581 1997)

"The order of pnontres prov~ded by E 0 5811997 IS more appropnate "

Calaras~ Tnbunal (Roman~an Bankruptcy Instrtute)

'The proposal is useful for u t a r y coverage of all the sltuatrons "

T m ~ s Trlbunal (Emereency Ordmance no 581 1997)

'The order of pnontles prov~ded bv E 0 58/I 997 is appropnate "

Teleorman Tribunal (RomanIan Bankruptcy Inst~tute)

'We agree wth RBI's proposals only for the case that emplovee's remuneration is prov~ded accordmg to art~cies no 9, no 17, and no 1811 st~pulated in law '

Bucharest Tribunal no 1 (Emergency Ordinance no 581 1997)

"The modlfied stage of the Law 6411995 IS not appropnate c o n c e m g the order of debt payment, t h s order IS correlated with the regulations concemng the clvil procedure RBI's proposals oppose the E 0 111 1996 and ~t IS not appropnate for the regulations In thls E 0 to be considered as unconstitutional "

Cluj Tr~bunal (Romanlan Bankruptcy Institute)

"Correlated to objections stipulated m art 106, the new dlstRBIutlon order descRBIed by RBI gives a better interpretation to the debts of budgetary type and also glves the poss~brl~ty to draw a better 11st of pnont~es "

Constanta Tr~bunal (Dlsagreesl Different Opinlon) I "We consider some of RBI's proposltlons appropnate but we propose the followng list of pnont~es 1,2,4,3, 5, 6, 7 8, and 9 "

Maramures Tnbunal (Roman~an Bankru~tcv Inst~tute)

"In our oprnion, the salanes provlded wthout havmg a llrnlted penod of tlme, from art 5, should be transferred to art 3 The State IS obllged to Insure the nght to work together w t h the constitutronal prlnc~ple st~pulatrng remuneration The state cannot ignore t h ~ s unrque pnnclple that cannot be strpulate accordrng to the nature of each obhgation "

ARTICLE 117 Law no 6411995

In any stage of the procedure, the court at the request of the syndic- judge, may pass a closmg declslon of the procedure ~f no assets ewst or the evlstlng assets do not suffice to cover the admlmstratwe eupenses, and no credltor offers to advance the adequate sums

Emergency Ordinance no 5811997

No applicable provlslon

Proposals for Mod~fieation made by Roman~an Bankruptcy Inst~tute

A new paragraph WII: be introduced (21, whtch will have the foliowng content "The final table of adjustment has the iegai power of a wnt of execut~an"

ARGUMENT ~t 1s necessary that the table of adjustment be observed by everybody w~thout other formalrtles

ARTICLE NO 11 7, COMMENTS

Olt Tribunal no 1 (Romanian Bankruptcy Institute)

"The proposals are appropnate for correlation with Law 3 111990 modlfied "

Satu Mare Tribunal no 1 (Romanian Bankru~tcv Inst~tutel

"This proposal provldes a shorter procedure and it also draws the steps to be taken for the dissolution procedure "

Timis Tnbunal (Law 6 4 1995)

"The tevt provides the requirements requested by practice and ~t doesn't need any other specifications "

Prahova Tr~buna l no 1 (RomanIan Bankru~tcv Institute)

'The proposal is appropnate to avoid the continuation of company's actlvlty that hab failed in properly carrying on its actlvity "

Bucharest Tnbunal No 1 (Law 641 1995'1

' RBI's proposal is opbonal though the arguments put forward by h s Tnbunal, are debatable they cannot justlfjr the proposal Besides, Law6411995 does not show that the lawmaker has m view the liquidation of the debtor entity in cases stipulated m art 1 17, concerrung the passing of a procedure closmg procedure '

CIuj Tribunal (D~sagrees/D~fferent Opinion) I "The tevt proposed by RBI stipulates that the syndic judge 'can', ask for dlssolutlon In our oplmon, the imperative should be used the syndic judge shall ask for the recording of the dissolution' in order to be accurate about the closing of the procedure because of the lack of sufficient monev to pay the debt "

Maramures Tribunal @ u a g r e e s ~ ~ f f & e n t Opmlon)

"Accordmg to art 222, point f, in Law3 1/1990 republished, a commercial company is dissolved by declmng bankruptcy and accordmg to art 228, par 1 the dissolut~on enta~ls the opemng of the l~quidat~on procedure If bankruptcv is equivalent w th stopping payments, the Trade Register takes note of the s~tuat~on together with the modifications of provisions in art 27 The dissolution should not be asked even if the l~quidation was caused by a lack of available funds (however, the comvaw can be crossed of remster) "

ARTICLE 120 Law no 641995

Any creditor may take evceptlon to the request of the synd~c -judge to pass a decis~on to close the procedure In at least 20 days after having sent a not~ficat~on to all creditors, the debtor and the terntonal Chamber of Commerce and mdustry, the court will hold a meeting to evamme the request and the evceptlons and to glve a settlement

Emergency Ordinance no 58/1997

Prclpassls for Mod~fieabon made bv Roman~an Bankruptcy Institute

AEter ART 120, art 120 1 IS mtroduced It: will have! the foIlow~ng content The syndic judge can requtre together w ~ t h the end of the procedure the statement of the

cornpay dissofutzon ' ARGUMENTS - the syndic judge daes not have to formulate a new act~on bu which to ask the d~ssolutian of the company, - rt 1s to avotd the situahon m whrch, although a legal decwmn of closmg the procedure was pronounced, the drssclfutron not bemg asked bv anyone, the company can canhnue the acuvlty, sometimes with great prejud~ces to other creditors

ARTICLE NO 120, COMMENTS

Oit Tr~bunal no 1

"For par no 1 we agree wth Law6411995 and for par no 2 wth RBI's proposals "

Satu Mare Tr~bunai no 1 (Roman~an Bankruptcy Instttute)

'The recording of the d~ssolut~on should be asked by court dec~slon "

Calarasi Trlbunal no 1 (Law 6 4 1995)

It IS recommended to avo~d repetlt~on (art 117 accordmg to the vanance proposed at page no 34 m the teut) "

The t e a of the law meets the requirements of the law and there are no additional requirements "

Bucharest Tnbunal no 1 (Emergency Ordinance 581 1997)

"We do not agree wlth RBI's proposal for the above mentioned reasons c o n c e m g art 117 "

Bucharest Tr~bunal no 2 (Roman~an Bankruptcy Inst~tute)

"The mod~ficabon wI1 be sent to the cred~tor's Chamber, to the debtors and the Chamber of Commerce, havmg ~n wew that m some cases there are a huge number of cred~tors "

Cluj Tribunal (Disagrees1 Different Opinion)

I "Some comments as for art 117, mstead of 'can' the ~mperat~ve should be used " I

Maramures Tribunal (D~sagreed Different Op~nion)

"The text is useless The request for closlng the procedure, at least in the case of Tnbunal IS filed w t h together w th the wrlt (subpoena) concemng the closmg of the procedure w t h all the cred~tors If creditors do not agree, ~t is obv~ous that they have different opmons "

Bankruptcy Stat~strcs

-

16 ICARAS SEVERIN 1 121 .$5 1 4)%( 51 [ * 230%l 631- $205%

17 ~ O L J 1 2 0 % 4 3 k S ~ 94~1 63 k'@?&05%

,----- . , - - - - . . ~.

BISTRITA NASAUD 1 4mf$#$l 31 ms@$l 3 5 ~ ~ $ @ % 1

1 0 I NIA 1 -...-.-..-- , .I --.-..--., B ..= 5 ., .'-. -ol&~l&,j4m*2~~~; ~$ti$~~e%6~@;2@$$Z~&i%$jlI New ~ e w ~

MOJ - 1997

B EST AVAIL-A BLE COPY

BUZAU BlSTRlTA NASAUD 1 14%

114% SALAJ

ALBA 1 17% 121%

TULCEA 1 37%

GORJ

TELEORMAN 068% '

0 72% 1 COVASNA GlURGlU

\ ' 049/0 VALCEA , 049%

0 88% UAMBOVITA 0 42%

/cases to be resolved 1 I

ARGES 0 13%

BlHOR

MURES 0 07%

OLT 8 34%

" "" ," 3 46% SlBlU 1

I ' GALATI

3 75% HUNEDOARA 3 81% I

I MOJ - 1997

MOJ -1997

Unresolved cases at lZ i3 l lW .. a "'"

0-6 mo ( U l c 1 6-lt mo I 1 year+ I " sup. - 1 Total (Gwen) - - ..

New

loo 00% 100 00% loo 00% 100 00% 100 00% loo 00% 100 00% loo 00% 100 00% 100 00% loo 00% loo 00%

D~fference 1 A d 1 01 1 01 - 1 0 ..-s [ 01-

0 l d ~ o l u r n n " ~ C I ~ e w l * New I 91 - N W ~ 101 New ~li..~ ~ e w t 8 I;h

MOJ - 1997 %

MOJ 1997 $1

I Sorted by total act~vlty I Cases to

10 SALAJ 7 --3-17% 28 O 16% 351 1 33%

11 TIMIS 11 498% 24 099% 35) 1 33%

12 ARAD 4 '"T;81% 30 ',f"24% 341 % 12%

13 DOLJ 18 834% 16 066% 341 129%

EST AVAfLABLE COPY

SUCEAVA BUZAU 0 76% 0 68%

HARGHITA MEHEDINTI 0 76%

0 83% BRAILA BACAU 0 80%

MARAMURES O 83% 0 87%

HUNEDOARA 0 95%

IALOMITA VALCEA 1 10% 1 06%

BRASOV 1 10%

SATU MARE 1 14% GORJ

121%

BlSTRlTA NASAUD 1 25% DOLJ

1 29%

ARAD 1 29%

TIMIS 1 33%

SALAJ 1 33%

CONSTANTA 144% lASl

1 59% GALATI 1 74%

NEAMT 1 86%

CLUJ 3 26%

ARGES 0 08%

MUfIEb 0 08%

CARAS SEVERIN CALARASI , TULCLA DAMBOVITA o 53% \ 034% I 0340/0 o 27 /O l ~ a s e s to be resolvedl

VRANCEA BOTOSAN I TELEORMAN

Chart - to be resolved Chart 4

064% \ 0 49% \ '

/ PRAHOVA 0 19% COVASNA

,, 030 ALBA 0 15%

\ I I / 0 15% BIHOR

0 08%

I 1 I Cases resolved

TOTAL (Computed)

TOTAL (Gwen)

Difference

16981 9475%( 891 497%

- New [ New ( New

I 6981 % 94 75%1 89

01 OOO%( 0

Old Column ( 4 1 New 1 5 .

497% 000%

9) 1792 : -9972%{ 1787

9972%1 NIA

000%) NIA

9

0

New f 7

5

N/A

N/A 1792

0

3

7 Unresolvedcases att213f197 No County name

0-6 rno (Calc ) ,642 mo 1 year +.: susp Total (Gwen)

New column 15 1

12 CALARASI 1 611 9531°hI 31 469%1 01 OOQ% 01 000% 641 10000%

13 CLUJ 1 361 97 30%( 11 2 70%( 0) 0 00% 01 0 00% 371 100 00% 14 CONSTANTA 281 933 33%1 241 800 00%1 41 233.33% 31 100 00% 3/ 10000%

EESTAVAILABLE COPY

MOJ-96 (22 05) xls

New ( New I

BEST AVAILABLE COPY

Document FlowlSystem Overv~ew Bucharest Court Svndlc Cases

Appendlx "C"

D o c u m e n t FlowlSystem Overv~ew Svndic clses Bucharest court M l o S tevanovich Source Intemev wIJudge 4ntonella Florescu Tnbunal Judge and President of Commercial Dis ismon and m t e m walk through conducted on J a n w 9 1998

Cabeat Tlus IS a cursorv overvle r of the paper flow tor 1 tvpmcal bankruptcv (svndic) case kough the Bucharest court svstem for onentatlon purposes As such ~t IS not mtended to be an edmustne anahsis

I Pet~tion Preuanuon A ?on-standard perruon IS prepared No form is used Stamps lndlcatmng that golernment ta\ has been paid (hbn~strv of Fmance) must be affi\ed Stamps lndmung judicial fee has been pard ( m s t r v of Jusuce) must be affived

2 Pet~tion make At Tnbunal Court Reglstnr Commercial Dnismon (Room 43-Dlma) V1 commercial clses are regmered here mc luhg srin&c cases

I A case number 1s assigned and a manual notauon m Regxstru Gened de Dosare (General Re~s te r l hornation P a m names case number ttpe of case RED mh notauon lor sndlc cases BLUE mk for all other commercial cases (Computer vas purchased for tius-Parallel entrv manual and computer)

B All subsequent m c o m g documents are logged here as nell

C Flle folder IS prepared and manually marked with a 1-e F1 for Svnchc cases (Falment) T~pcal ly m red mnk (Stamtlcal Inchcatlon Lower nght comer))

D F ~ l e IS hand carned to Tnbunal Judge s clerk (Room 37)

2 Processinq Tnbunal Judge -

A Clerk logs file m Reglstru Unu Statlstlc (Tau Statlstrcal Log) Information lmted Whlch axes pard and w e of case

B Clerk logs actslevents in Registm (Repster) Informanon Judgments sentences etc by Judgment number

C Clerk phvsmcallv bnngs file to Tnbunal Judge for requlred actlon

D Tnbund Judge logs acts lnto Condrca De S e h t a (her own handwnung) Kept In the court arcluves

E Clerk sends file to Svndx Iudge s Clerk (Room 44)

4 Processinq Svnd~c Judge-

4 Stndic Judge s clerk logs cases in speclal svndmc case reg~ster (also c~l led Regstmi General Dosar) This same ~nformatton w ~ l l lns also been recorded In the General reg~ster with the Tnbunal Court Reg~stm Commercial D~vls~on (Room 43) except here only syndmc case events are logged (Note It IS unclear whether both the Tnbunal Judge s clerk and the SvnQc Judge s clerk log entries m t h~s register )

Twentv thee separate columns denoting certain events of slgmficance are displayed across the pages of t h s log (See Edubtt 10) The translauon of the column hmdings is as follows

Column

Reference humber Case numbermate of Pet~tlon OrgaruzaUodperson filing the peuuon Clarmantlcreditor Detendantldebtor Date of commumcation re et 22 Evpmuon date re Art 26 Dxe of notificmon re kt 37 Date objectlon registered Deadline for objection Resoluuon of objecuon Date aopeal of objection 1s regmered Date file transterred on appeal Date of appellate decislon on objecuon Date of return from appeal of objectlon Deadlme for court of first tmpression (Tnbunai) Declsion of Tribunal, Date or appeal Date of file transier on appeal A~pellate decision Date of file return Svndlc Judge Date file &smbuted

C After Svndlc Judgeflnbunal Judge acuon fills out a form order Commcare (Commuxucatron) Notlficare (Bouce) Inchelere (Order)

D Orders/Commmcahons/Nouces are stamped w ~ t h the official seal (Edubit '10 ) and served by special messenger workuig for the court for m & c matters The bortom half is filled out bv the messenger and acts as a proof of servm It is returned and kem m the file A hst of sample orders is attached hereto

1 Communication or pebuon regstmuon by creditor (wthm 48 hours pursuant to Art 25)

2 Nouce of case conunuat.~on/frst cred~tor meeung (I e credtor petmon not rejected per k t . 27) (Drected to the Office of the Resstrar of Commerce)

3 Nouce of case contmuationlfirst credltor rneeung (Same as B above only cfirected to the Debtor or Creditors)

4 Order assl,mg Svndc Judge (dxected to Syndic Judge) (wthm 3 davs pursuant to 4rt 30)

5 Decmon af Tnbunal re Conrrnuat~on af proceedrng (no contestatlon by debtor) and notlficauon of dec sion to appolnt a Svndx Judge

6 Official stamps and markmg (Sample)

S h h u t e Order ( n w n g an e\pert based uuon Svndx Judge s requea pursuant to Arts 82 and 6)

9 Order replacing a Svndlc Judge (Pursuant to Art 17)

E The files are kept m the custodv of the Svnhc Judge s clerk

Secured Transact~onlCollateral Law Memorandum Status Report as of July 14 1998

Appendfx "D"

Memorandum

To Susan Gurley

From Mllo Stevanovrch

Re Secured Transact~on/Collateral Law Rerorm Progress

Date July 16 1998

I Current Status

Prlor 'o January 1989 the Mlnlster or Justlce assembled a team of scholars to draft a new Romanran secured transact~on/Collateral law cons~stlng of commercral law Professors Sorrn Dav~d Bogdan Dumttrache and Aladar Sebenl Thls group has submrtted a drat? of the prooosed collateral law to the Mrnrstry or Justlce ( MOJ ) Tor revlew The pnnc pals at ,he MOJ Involved rn the revlew or thls draft are Mana Avram and Marla Nlcolae

Accordrng to my dlscuss~on wlth Professor Davld several draftlng committee meetlngs were convened and several European adv~sors have commented on the submltted draft lncludlng the European Bank for Reconstructlon and Development ( EBRD ) ABA CEELl has also been tnvoived and has worked drectly the drartrng team the MOJ and Parhament on the collateral law drafts

The nos: recent draft that P, ofessor Davld s group has completed (on whlch the EBRD provrded commentary) IS attached However I was Informed today by Gary Merrtck of ABA CEELl that a rev~sed final draft IS betng produced ABA CEELl IS preparrng a translation of thrs draft to whlch I wtll have access ABA CEELl plans to contlnue to work with the drafting team the MOJ and Parhament on further developments

Professor Dum~trache stated to loan Chlper at the MOJ that some collateral law related provlstons law will be lncluded ~n the new Clvll Procedure Code currently under consrderatron Thrs would lndrcate that other statutes have been consulted and modtfied for consistency

Thrs new draft awalts revfew and approval by the MOJ It may then be submltted to the Romanlan Government for ecther Issuance as an Emergency Ordinance or for submtssron to Parhament for conslderatlon and passage as a law Parlrament has presently concluded its sesslon and IS ~n recess for the summer

EBRD Comments

The EBRD has revlewed the ex~stlng legal framework for secured transacttons ~n Romania and has commented on the lnlttal draft of the group headed by Prof Sorrn Davrd The EBRD ~ssued a report dated March 5 1998 The EBRD report provrdes an excellent overvrew of the exrstlng RomanIan collateral laws whlch reference to no less than four separate statutes Prof Davld md~cated that the suggestrons made by the EBRD were considered by hts group and were ~n substance lncluded ~n the draft currently under subm~ssron to the MOJ

The EBRD comments appear to be well reasoned and Include key consrderatlons that are Important for thrs law to contarn to be consistent wlth western commercrai pr~nclpais and particularly from the commerctal insolvency standpornt The EBRD report suggests that provlslons be included that

1 Allow the grantor of the securlty Interest to be able to keep possession and use the collateral

2 Provlde for a system of reglstry and publ~catron of non-possessory securltv Interests

3 Prov~de certamty as to the creatron and enforcement of the securlty Interest

4 Prov~de for speedy and cost-effective recovery of secured assets

5 Provlde for a first prlorlty ahead of other cred~tors whlch IS mamta~ned In bankruptcy

6 411ow for the cost effectwe creatlon maintenance and exerclse of secur~ty Interests

7 Allow for any person to grant a secunty Interest In ther own assets

8 Allow for any person who IS owed a secured debt to receive a secur~ty Interest

9 Allow for the creatlon of security Interests related to all types debts and for a changrng pool of debts

10 Allow for the grant~ng of a secur~ty Interest in all types of property rncluding r~ghts iuture assets and a changmg pool of assets

11 Allow the partles broad flevtbil~ty In craft~ng the terms of the securrty agreement

Ill Comments

The EBRD Report also denotes concern over the Issue ra~sed ~n our analvs~s or RomanIan Bankruptcy Laws regardmg the ablhty of the Government to seize collateral subject to a pre- ex~stmg secur~ty rnterest The EBRD report states

The effect of the current system of orrvrleges under Pomanlan law and rn partrcular the pnonfy gwen to the state menrs careful a n a l y s ~ srnce thrs could severely reduce the economrc benerrt That could rlow frcm a new law on pleages

EBRD Report Reformrnq the Romanlan Laws on Secured Transactrons 5 March 1998 at 5

Th~s is prec~sely the Issue of concern that has been rarsed In the analys~s or the recent bankruptcy amendments advanced by Emerg Ord No 58 whlch leave the Issue unresolved If pre-existing securlty lnterests are not protected from subsequently arlslng state hens commerc~al lenders may be unwllllng to prov~de flnanclng under these condltlons