THE "INSOLVENCY CODE" CONFERENCE / DIANA DELEANU, OF LAW FIRM DELEANU AND GRIGORESCU: "Mayoralties' insolvency, a pretty frame that's empty"

The insolvency of the state's territorial-administrative entities was regulated in 2012, through an emergency ordinance, but the legislation in the sector does not get applied, said Diana Deleanu, lawyer and insolvency practitioner with "Deleanu şi Grigorescu". "It's like having a nice frame that is empty", she said, and she went on to say that many communes are "de facto" insolvent, but the ordinance doesn't help them resolve their issues, which is why they don't resort to this instrument.

According to the lawyer, many territorial-administrative entities have tried to avoid insolvency and have asked for more money from the state budget. "What's most shocking is that the Government continues to allocate public funds to support those mayoralties, but it is disregarding the fact that some of them have incorrectly used European funds and they had to repay the money, reaching an indebtedness degree of 1000%", Diana Deleanu further said.

She says that a law of insolvency dedicated to mayoralties is a correct solution, but it is one that also needs to ensure efficient turnaround instruments: "The receiver only takes on the mayor's financial and fiscal roles and they are expected to manage the funds far more efficiently. A turnaround plan is drafted, and if it is followed, the procedure is fulfilled successfully. However, the current law does not stipulate what happens is this plan fails. One solution would be for that territorial entity to disappear and to be merged with another, efficient entity. But that can't be done without a referendum".

Mrs. Deleanu warned that many of the mayoralties' financial issues come from the inadequate rate of receivables collection.