1. Debts Recovery in Romania

2. INTRODUCTION Recovering a debt can be a complex process everywhere, for every business, regardless of the industry. The Romanian legal system is granting two fast legal procedures assuring to creditors the collection of their debts. This presentation scope is to provide the legal actions available to creditors for the recovery of the debts in Romania against private companies.

3. LEGAL PROCEDURES FOR DEBT RECOVERY The Romanian Law provides the following actions for debt recovery: FAST PROCEDURES: I. SUMMONS for payment and I. SUMMONS for payment and II. ORDINANCE for payment II. ORDINANCE for payment COMMON PROCEDURES: III. COMMON LAW procedure and III. COMMON LAW procedure and IV. INSOLVENCY procedure IV. INSOLVENCY procedure

4. I. THE SUMMONS FOR PAYMENT – G.O. 5/2001 This procedure allows the fast recovery of the debts which are determined, expressed in money and due; The debt must be assumed in a written contract or in a statute, regulation or other written document, agreed upon by the parties and which provides parties rights and obligations regarding the execution of certain services, works or other activities.

5. FIELD OF APPLICATION The Summons of Payment procedure is a special and fast court action that may be filed only for the collection of debts expressed in money resulting from a contract or other written document, signed or agreed upon by both parties.

6. EVIDENCE The only admissible evidence during the Summons of Payment procedure is represented by written documents; The only admissible evidence during the Summons of Payment procedure is represented by written documents; NO prior procedure or notification is necessary. NO prior procedure or notification is necessary.

7. THE SUMMONS OF PAYMENT EXECUTION The court decision for approval of creditor’s action is irrevocable after no appeal was filed or after the appeal was rejected; The irrevocable decision has to be enforced at creditor’s request. The decision may be executed forcedly by the executor at creditor’s request and cost.

8. THE APPEAL BY THE CREDITOR The court decision whereby the judge rejects the creditor’s request is irrevocable; In that case, as well as in case the request was partially awarded, the creditor may file legal action based on the COMMON LAW PROCEDURE.

9. THE APPEAL BY THE DEBTOR The debtor may file appeal against the court decision within 10 days from decision receipt; The appeal suspends the enforcement of the court decision.

10. II. ORDINANCE OF PAYMENT –G.E.O. 119/2007 This is the fastest debt recovery procedure, similar to the Summons of payment, but having the following consistent advantages: This is the fastest debt recovery procedure, similar to the Summons of payment, but having the following consistent advantages: The Ordinance duration is limited to 90 days. The Ordinance duration is limited to 90 days. The Ordinance allows extended evidence to be produced for proving the claim and the defense (e.g. correspondence).

11. ORDINANCE ADVANTAGES The appeal of the debtor against the Ordinance does NOT suspend the decision; The appeal of the debtor against the Ordinance does NOT suspend the decision; The suspension of the decision may be granted by the court only upon payment by the debtor of a security established by the court; The Ordinance decision is enforced by the law; the decision may be forcedly executed by the executor at creditor’s request and cost.

12. III. COMMON LAW PROCEDURE – Civil code This procedure is filed in case the Summons or Ordinance of Payment were rejected or only partially awarded; Common procedure is used particullarly when evidence has to be analyzed due to its lack or defficience, for example: the invoices are not signed, the products or services are not accepted, witnesses declarations or experts opinion are necessary etc. Common procedure is used particullarly when evidence has to be analyzed due to its lack or defficience, for example: the invoices are not signed, the products or services are not accepted, witnesses declarations or experts opinion are necessary etc.

13. Disadvantages between COMMON LAW PROCEDURE and the fast procedures The tax for filing the action in the Common procedure is a percentage of the due sum while in the fast procedures the tax is €10. For example, the tax for a claim of ~€ 43.000 is ~€ 700. Duration of the procedure. Common procedure is not fast and has a duration of 1-2 years or more. Duration of the procedure. Common procedure is not fast and has a duration of 1-2 years or more. The action may be exercised within 3 years in all the procedures.

14. SECURITY CLAIM MEASURES The security measures may be granted in court and are enforced by the executor. The conservatory seizure is taking into possession of movable or immovable assets; The attachment of the amounts leads to blocking bank accounts; The judicial seizure implies the entrusting of movable or immovable assets, object of parties litigation to a person, in order to prevent their loss or damage during the trial.

15. CONDITIONS FOR SECURITY MEASURES The creditor shall pay a security determined by the law or by the court in variable percentages of 10%-20%. Provisory security measures are ordered if the creditor’s debt is: due or, if not due, the debtor has diminished the securities granted to the creditor or has not provided the securities agreed etc.; evidenced in a document; if no writ is available, the creditor shall file a claim in court and shall pay a security of 50% of the claim value.

16. FORCED EXECUTION The court decisions may be executed forcedly by the executor. The executor fee for the recovery of sums over € 23.000 is 1% and for smaller sums is between 2% and 3% For sums under € 12.000 the fee is up to 10% of the value of the claim. Before court final decision or security measures the creditor has access to financial situations from the Ministry of Finance site and in copy from Trade Register. Before court final decision or security measures the creditor has access to financial situations from the Ministry of Finance site and in copy from Trade Register.

17. IV. INSOLVENCY (BANKRUPTCY) PROCEDURE – LAW 85/2006 The conditions for the action file are simple: The debt must be determined, liquid, 30 days due and over The debt must be determined, liquid, 30 days due and over € 7.000; The creditor is not requested to provide evidence for the insolvency of the debtor; The judge may oblige the creditor to deposit a security up to maximum of 10% of the claim value. The judge may oblige the creditor to deposit a security up to maximum of 10% of the claim value.

18. DISADVANTAGES OF THE INSOLVENCY PROCEDURE Usually the insolvency actions are filed by the creditors with the scope to put pressure for debts payment. It may turn out that the debtor is insolvent and unable to pay its debts. The major disadvantage of the insolvency procedure is that the debtor’s assets may be insufficient to cover the creditors’ claims. Usually the insolvency actions are filed by the creditors with the scope to put pressure for debts payment. It may turn out that the debtor is insolvent and unable to pay its debts. The major disadvantage of the insolvency procedure is that the debtor’s assets may be insufficient to cover the creditors’ claims. The duration of the procedure is between 1-2 years or more. The duration of the procedure is between 1-2 years or more.

19. THE ORDER OF CREDITORS IN CASE OF INSOLVENCY The Insolvency law establishes the priority in which the creditors claims are satisfied: The sums obtained from selling the assets which are subject to a security will be paid to the creditors having the security; The sums obtained from selling the assets which are subject to a security will be paid to the creditors having the security; Also, the claims for salaries, public debts and other come before all other creditors. Also, the claims for salaries, public debts and other come before all other creditors.

20. CONCLUSION The Romanian legal system is providing fast legal procedures assuring to creditors the collection of their commercial debts against private debtors. The option between the debt recovery procedures granted by the Romanian law should be recommended by legal advisors based on the clear information and evidence and taking into account the particular circumstances of the case.