Glossary of insolvency terms.

Insolvency

The state of a debtor's estate characterised by insufficient available funds to pay debts that are certain, liquid and due. Insolvency is presumed when the debtor has failed to pay a debt for 60 days after its due date (Romanian Law 85/2014).

Imminent insolvency

The situation where it is proven that the debtor will be unable to pay its debts at maturity with the funds available on the due date. It allows the debtor to request the opening of proceedings before actual default sets in.

State of difficulty

The situation of a company that is not yet insolvent but risks becoming so unless it takes action. It is the gateway condition for the preventive procedures: the restructuring agreement and the preventive concordat.

Insolvency practitioner

An authorised professional, member of UNPIR (the Romanian National Union of Insolvency Practitioners), who may be appointed judicial administrator, judicial liquidator, concordat administrator or administrator in personal insolvency proceedings. The profession is regulated by GEO 86/2006.

Judicial administrator

The insolvency practitioner appointed by the court during the observation period and in reorganisation. They supervise or manage the debtor's activity, verify claims, draw up the statutory reports and propose or assess the reorganisation plan.

Judicial liquidator

The insolvency practitioner appointed in bankruptcy. They inventory, appraise and sell the debtor's assets, then distribute the proceeds to creditors in the statutory order of priority.

Concordat administrator

The insolvency practitioner who assists the debtor and the creditors in the preventive concordat procedure: they draw up the restructuring plan together with the debtor and supervise its implementation.

Syndic judge

The specialised judge who presides over the insolvency proceedings: opens the procedure, confirms the practitioner, rules on challenges, confirms the reorganisation plan and orders the transition to bankruptcy or the closing of the case.

Observation period

The interval between the opening of insolvency proceedings and either the confirmation of a reorganisation plan or the entry into bankruptcy. During this period the estate is inventoried, claims are verified and the realistic chances of recovery are assessed.

Judicial reorganisation

The procedure through which an insolvent company continues operating under a plan approved by creditors and confirmed by the syndic judge, lasting up to 3 years (extendable under the law). The alternative to bankruptcy.

Reorganisation plan

The document showing how the company will pay its debts and recover: payment rescheduling, debt reductions ("haircuts"), partial asset sales, operational restructuring. It is voted on by classes of claims and confirmed by the court.

Bankruptcy

The insolvency procedure through which the debtor's estate is liquidated to cover its debts, followed by the company being struck off the register. It applies when reorganisation is not possible or has failed.

Simplified procedure

The fast-track form of bankruptcy, applicable to debtors with no significant assets, no accounting records, or which do not qualify for reorganisation. The debtor enters bankruptcy directly, with no or only a short observation period.

Preventive concordat

An insolvency-prevention procedure: the debtor in difficulty proposes a restructuring plan to its creditors, under the guidance of a concordat administrator and the protection of the court. The company continues to operate normally.

Restructuring agreement

A preventive procedure introduced by Law 216/2022: the restructuring plan negotiated with the affected creditors is confirmed directly by the court, without opening insolvency proceedings and with the debtor remaining in control.

Claim

A creditor's right to receive a sum of money from the debtor. To take part in the proceedings, the claim must be filed within the deadline and registered in the table of claims.

Secured claim

A claim backed by security over the debtor's assets (mortgage, pledge). The secured creditor is paid with priority out of the proceeds of the secured asset.

Unsecured claim

A claim without security. Unsecured creditors (typically suppliers) are paid after secured creditors, employees and the state budget, out of whatever remains in the debtor's estate.

Proof of claim

The application by which a creditor requests the registration of its claim in the table of claims. It must be filed within the deadline set by the opening judgment; missing the deadline generally means losing the rights attached to the claim in the proceedings.

Table of claims

The official list of claims admitted against the debtor, with amounts and order of priority. It goes through successive versions: preliminary, final, supplementary, consolidated final. It may be challenged within 7 days of publication in the BPI.

Body of creditors

All the creditors registered in the table of claims, regarded as a collective body whose interests are represented in the proceedings by the creditors' assembly and the creditors' committee.

Creditors' assembly

The collective body through which creditors decide on the essential matters of the procedure: voting on the reorganisation plan, approving how assets are to be sold, appointing the creditors' committee.

BPI — Insolvency Proceedings Bulletin

The official publication through which procedural acts are communicated (summonses, notices, judgments, tables of claims). Publication in the BPI makes the acts enforceable against all parties.

Stay of individual enforcement

A key effect of the opening of insolvency proceedings: all individual enforcement actions by creditors are stayed by operation of law, and claims can be recovered only within the collective procedure.

Director liability (art. 169)

The possibility for the persons who caused the insolvency through wrongful acts (using company assets for personal benefit, fictitious accounting, asset stripping) to be held personally liable for the uncovered liabilities.

Discharge of residual debts

The benefit granted to a good-faith natural person at the end of personal insolvency proceedings (Law 151/2015): the debts left unpaid after the plan or liquidation are written off, providing a genuine fresh financial start.

The definitions are informative and worded for clarity, not as exact quotations from the law. For your specific situation, consult our firm.