1. Summary

On December 11, 2023, Order no. 1,940 of November 27, 2023, approving the Procedure for the Assignment of Budgetary Claims Owed by Debtors Under Insolvency Proceedings (“Order no. 1,940/2023”), entered into force.

This Order introduces a new procedure allowing the assignment of budgetary claims owed by insolvent debtors, which now includes not only claims listed in the creditors’ table but also current and conditional claims registered by the debtor.

Importantly, the assignment price can now be paid in installments over a period of up to 3 years, and the offered price may cover as little as 50% of the claim value.

2. Legal Framework

The substantive legal basis for the assignment of budgetary claims is Article 264¹ of the Fiscal Procedure Code, supplemented by Order no. 1,940/2023 and Law no. 85/2014 on insolvency prevention and insolvency procedures.

3. Subject of the Assignment of Budgetary Claims

Unlike the previous procedure, which only allowed the assignment of budgetary claims listed by the tax authority in the final creditors’ table and still outstanding at the time of the assignment contract, the new procedure broadens the scope to also include:

1. Budgetary claims listed under suspensive conditions in the creditors’ table;
   ii. Budgetary claims not accepted in the reorganization plan confirmed by the syndic judge;
   iii. Current budgetary claims that are certain, liquid, and due, arising during the insolvency proceedings and evidenced by documentation.

Excluded from assignment are budgetary claims registered after the issuance of the fiscal certificate (which is to be issued within 6 working days of offer registration by the relevant tax office/unit).

4. Cumulative Conditions for Assigning Budgetary Claims

4.1 Assignment Price

A significant change compared to the old procedure is that the offered assignment price can now cover as little as 50% of the starting price (which is usually equal to the claim’s value). Previously, the price had to cover the full value of the claim, making the mechanism unattractive to potential assignees.

4.2 Payment Terms

The assignment price can be paid in installments, just as in the previous procedure. Payment options include:

• (i) Full payment before the signing of the assignment contract (no guarantees required);
• (ii) Full payment within 30 calendar days of signing, with the provision of guarantees to cover the price;
• (iii) Payment in installments over a maximum of 3 years from the date of signing, with guarantees covering both the principal and accrued interest.

4.3 Guarantees

Accepted forms of guarantee include:

• (i) Cash amounts deposited in the name of the winning bidder at the disposal of the competent tax authority, at the State Treasury;
• (ii) Letter of guarantee/guarantee insurance policy;
• (iii) Precautionary seizure of the bidder’s property;
• (iv) Mortgage or pledge agreement in favor of the tax authority over unencumbered third-party assets.

In the last two cases, assets must be appraised by an authorized valuator after preliminary approval is granted, as is also the case with payment deferral arrangements secured by guarantees.

5. Conclusions and Comparison with the Previous Regulation

In summary, the innovations introduced by Order no. 1,940/2023 are as follows:

• Unlike the previous regulation, the new procedure allows the assignment of current and conditional claims, not just those listed in the creditors’ table;
• The offered assignment price can be as low as 50% of the claim’s value, as opposed to the prior requirement for full value;
• The assignment procedure can now be initiated anytime an offer is submitted to the tax authority, without additional conditions;
• No longer required is the justification of a public interest for the assignment.

In conclusion, we consider the new procedure both welcome and more flexible. It provides real support to debtors undergoing insolvency proceedings who aim to close the process and return to business, while also enabling tax authorities to improve recovery rates of budgetary claims within insolvency procedures.