State of emergency in the insolvency procedure, April 2020

In view of the evolution of the international epidemiological situation caused by the spread of Coronavirus, which determined the pandemic declared by the World Health Organization, on March 11, 2020, the Decree no. 195/2020 on imposing the state of emergency on the territory of Romania (the “Decree“) has been adopted.

By Decree, a series of urgent measures with an exceptional character were taken in the social, economic and justice fields, on one hand, in order to limit the infection with Coronavirus and, on the other hand, to diminish the negative effects on the economy.

The major impact generated both on the global economy and on the national economy, which could be reflected as a negative evolution of the gross domestic product for the current year, as a consequence of the Covid-19 outbreak, imposes measures in order to mitigate these negative repercussions on the economy. In this regard, the member states of the European Union have already begun to promptly respond to the imperative of adopting instruments protecting the business environment.

Thus, continuing the measures provided by the Decree imposing the state of emergency, the Government Emergency Ordinance no. 29/2020 regarding certain economic and fiscalbudgetary measures (”G.E.O. no. 29/2020“)3 anticipates the inevitable confrontation with an extended payment incapacity or even with a sudden lack of cash-flow with respect to the small and medium-sized companies.

The following measures aimed at mitigating the socio-economic impact of the Coronavirus pandemic concern the postponement of the credit rates payment for the benefit of the individuals and companies, whose incomes have been directly or indirectly affected, for a period of one to nine months, namely by the end of this year at the latest.

At the level of the European Union, in order to mitigate the negative effects on the population standard of living and on the economy, the European Commission4 has adopted a wide set of economic measures, adapted the European budget provisions and revised the rules on state aid, instating the initiative to invest the amount of EUR 37 billion as a response to Coronavirus, in order to provide liquidities to small businesses and to the healthcare sector.