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EXPERTISE / topic review

INSOLVENCY  – A Smart Crisis Ally

Economic crisis developments have seen insolvency as a valuable instrument once a business finances are plummeting. It offers you legal protection and allows you to buy some time in order to be able to come up with a plan that would allow restructuring & re-orientation. It can bring about a valuable contribution to the continuation of business and not its imminent collapse. For example, voluntarily commencing insolvency procedures, lays of pressure from banks, gives priority to wages and personnel costs, and may offer an upper hand in collecting the companies’ owed cash. So, if well thought out, an insolvency strategy could mean the salvation of the business and a step forward to success.

Careful though, if you are on the other side: insolvency may be used by some practitioners in Romania as an instrument for intimidation. It may be a lot easier, cheaper and comfortable to pursue the insolvency procedure on a business than start a civil / commercial court action that should bring about dept recovery. Therefore it sometimes comes with a snowball effect on relations to various parts as it is a very fast procedure once it has been authorized.

The commencement of the liquidation procedure can be the initiative of the creditor or the debtor depending on the business agendas to be reached, or other landmarks of their strategic processes. It is important to keep the liquidation procedures under control and there are legal ways to do it efficiently.

But please remember, no matter what part of the barricade, all sides should have a win-win attitude. Otherwise there is a great deal of chance that the liquidator be the only true winner of the “feud”.

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