Selling an industrial asset in bankruptcy proceedings

Article published in Romanian in PHOENIX no. 93, the insolvency review, July-September 2025: https://www.unpir.ro/documents/phoenix/pdf/revista_phoenix_nr_93.pdf. English translation.

Florin Daniel Barbu, attorney-at-law, insolvency practitioner, member of the Board of INPPI

From valuation to the handover of the assets sold. Practical aspects¹

"The sale of an industrial asset within bankruptcy proceedings represents a complex process, which must be successfully managed by the liquidator. Many stakeholders are involved in the sales process, each with their own particular interests. The secured creditor is interested in covering his claim and possibly interest and penalties. The rest of the creditors want to collect as much as possible, even at the risk of blocking the transaction. The buyer wants to pay the lowest possible price and have as few obligations possible. Employees also have their own interests. The state budget is sometimes more attentive to what it can collect immediately than the economic activity (and implicitly taxes) generated by the successful sale of the asset to an entity that will continue its activity. The sale procedure involve legal, economic and logistical aspects alike, with the ultimate goal of maximizing the debtor's assets and ensuring a transaction in compliance with legal requirements. In the following material we will provide a detailed presentation of both the preparatory stages of the capitalization procedure and the procedure's actual stages."

The sale of an industrial asset in bankruptcy proceedings is a complex process, governed mainly by Law no. 85/2014², although the Code of Civil Procedure and other legal acts also apply.

For the sale procedure to be completed successfully, economic and logistical aspects must be taken into account alongside the legal rules, and all the parties involved must be carefully coordinated, the ultimate aim being to maximise the debtor's estate and to secure a transaction that complies with the legal requirements and will stand up to any challenges.

It should not be forgotten that this procedure has many actors, each with its own particular interests: the secured creditor wants to cover its claim and possibly the interest and penalties; the other creditors want to collect as much as possible, even at the risk of blocking the transaction; the buyer wants to pay as little as possible and take on as few obligations as possible; the employees also have their own interests; and the state budget is sometimes more attentive to what it can collect immediately than to the economic activity (and, implicitly, the taxes) that the successful sale of the asset to an entity that will continue its operation will generate.

All these actors try to influence, and sometimes put pressure on, the liquidator in various ways, including by challenging before the judge various aspects they are unhappy with, in order to achieve their own interests; and above them all "presides" the syndic judge, who will ultimately decide whether the liquidator's activity complied with the legal provisions, which are sometimes unclear and/or incomplete (the most "forceful" go straight to the prosecutor's office in search of "justice", even if what they complain about has no relevance from a criminal law perspective — this, too, is a form of pressure).

In addition to strict compliance with the legal rules and the relevant decisions of the creditors, the liquidator's work must include a command of marketing and negotiation techniques and of management, as well as the ability to withstand pressure and to reconcile all these interests sufficiently for the transaction to take place.

In what follows, we will attempt a detailed account of the stages preceding the realisation procedure and of its actual stages. At the end, we will also set out a few stages that follow the sale but are closely linked to this procedure.

Premises

The opening of bankruptcy proceedings marks the end of the life of a professional, as defined in art. 3 para. (2) of the Civil Code, being, in line with the most recent principles of insolvency law, the last procedure that can be implemented — possibly after the insolvency prevention and pre-insolvency procedures have been exhausted — before its deregistration.

The theory assumes that bankruptcy will be resorted to only once attempts to turn the debtor around and reintegrate it into the economic circuit are not possible or have failed, given that it is much easier to continue an activity than to restart from scratch, even where the assets on which the activity was previously carried out are taken over in relatively working order.

Our more than 25 years of experience in the field show, however, that in certain cases a quick sale of the asset is preferable to a long and unsuccessful reorganisation, which only increases the body of claims through accumulated operating and preservation costs, leads to the physical and moral wear of the asset, and results in the loss of supply chains and of key employees. This must, of course, be judged case by case, and in some cases even a reorganisation may include the realisation of a functional part of the assets.

The main purpose of this article is to present the stages of an organised, forced sale of industrial assets in bankruptcy proceedings; however, to the extent compatible, they may also be taken into account for the realisation of such an asset in reorganisation proceedings, as part of the plan.

We will not treat as stages of the sale those preliminary procedures which, although important for the sale, are not actually part of it (e.g. drawing up the tables of claims).

Stages of the sale procedure

1. Stock-taking. What we will sell.

In our view, the first important stage — sometimes neglected — in preparing a successful sale is the inventory. The stock-taking of the debtor's assets is carried out in accordance with art. 151 et seq. of Law no. 85/2014 and is a measure preceding the liquidation of the estate.

Under art. 152 para. (2) of Law no. 85/2014: "As the stock-taking proceeds, the judicial liquidator takes possession of the assets, becoming their judicial custodian". This means that the liquidator is also answerable for these assets, with all the implications of that situation.

The stock-taking ends with the drawing up of the inventory report, which contains a description of all the debtor's identified assets, their book and physical quantities, and remarks on their condition. The inventory must take into account Order no. 2861/2009 approving the Rules on the organisation and performance of stock-taking (...), issued by the Ministry of Public Finance.

We consider it important to identify any differences between the book and physical quantities, and the persons responsible where assets are missing (storekeepers, directors, etc.). It is not uncommon for the book records to differ enormously from what physically exists. If the inventory is done "sight unseen", from the office, liability for missing assets lies with the liquidator, who takes possession of the assets — in theory, of all of them — according to the stock-taking report. Later, at the valuation or sale stage, this difference between the books and reality will come to light.

Equally important, in our view, is to take stock of all types of assets. As a rule, the debtor's accounting department provides lists of buildings, fixed assets and possibly low-value inventory items.

But one must also consider the amounts in bank accounts, receivables, the cash desk, raw materials, inventories, work in progress, investments in progress, claims against third parties, holdings in other companies, possibly off-balance-sheet assets, fully depreciated assets that still physically exist, products held in custody, licences, patents, other intellectual property rights, etc. Not all of these asset items will be present in every case, but careful stock-taking can prevent complex problems later.

2. Valuation. At what price we will start the sale procedures.

The valuation gives us a benchmark against which to set the starting price of the sale procedure, the minimum sale price and, possibly, to assess the offers received. Although creditors, the court and the authorities usually refer to the valuation when assessing the success of a sale, our opinion is that the valuation is only an estimate: the price resulting from it may be in line with the market or far from it. But the valuation is required by law, and therefore mandatory.

The real price of an asset, however, is not given by the valuation, whether it is based on the Market approach (sale prices of comparable assets), the Income approach (the money that exploiting the asset could bring in) or the Cost approach (what it would cost to recreate it today, less wear and tear).

These are all estimates; ultimately, the "value" of the asset will be set by the market, following a competitive, transparent sale procedure with adequate publicity.

Under art. 154 para. (2) of Law no. 85/2014: "Liquidation shall begin immediately after the judicial liquidator has completed the stock-taking and filed the valuation report (...)".

Thus, after the stock-taking stage, the debtor's assets will be valued. The valuer is appointed and their fee set by the insolvency practitioner in accordance with art. 61 and art. 154 para. (2) of Law no. 85/2014, subject to the approval of the creditors' committee. We recommend complying with the procedural rules on convening the meeting, recording the votes and taking decisions, in order to reduce the risk of challenges.

The valuation report is filed with the case file, and the insolvency practitioner must publish a notice in the Insolvency Proceedings Bulletin, which will also contain a summary of the valuation, in accordance with art. 155 of Law no. 85/2014.

The insolvency practitioner and any of the creditors may raise objections to the result recorded in the valuation report, on the basis of and in accordance with the procedure in art. 62³ of Law no. 85/2014.

One option sometimes used in practice, based on the principle of maximising the debtor's estate and also bearing in mind speed (Liquidation shall begin immediately after the judicial liquidator has completed the stock-taking⁴), is to use a valuation previously carried out (filed) in the insolvency file — for example, the one made at the beginning to determine the amount for which the secured claims are entered in that category.

We do not reject this option, but we consider that the older valuation may be used only if the value of the assets was estimated by reference (also) to their liquidation value and the valuation is no more than a few months old. If it is older or does not contain the liquidation value, the valuation report can be updated, at a lower cost in time and money. In any event, we recommend that the creditors (re)approve this valuation/update, following the procedure described above.

If the objections raised are upheld by the syndic judge, the judge will order the valuer, on pain of a fine, to respond to them. A new valuation may be ordered "for well-founded reasons, as well as where the response to the objections is unsatisfactory"⁵.

3. Drafting the sale regulations. How we want to sell.

Depending on the nature of the object of the sale, the insolvency practitioner may propose the type of sale it considers appropriate so as to ensure the maximisation of the debtor's estate — the principle governing the sale procedure —, namely a public auction, direct negotiation or a combination of the two, a proposal which is then to be approved by the creditors' meeting.

The sale regulations lay down the general conditions of the sale, namely: the starting price, the minimum price, the assets being sold, the publicity formalities, the moment at which ownership passes, the terms of payment of the price, etc.

Rules on pre-emption rights sometimes apply, the legal provisions not being harmonised as regards pre-emption in bankruptcy sales. It must be checked, for example, whether Law no. 422/2001 on the protection of historical monuments or Law no. 17/2014 on certain measures regulating the sale of agricultural land apply.

The sale regulations also lay down special conditions for each of the chosen types of sale, as follows:

• the bidding increments, the frequency of auctions, the rate by which the price is reduced after each auction ending without an award, the documents to be submitted to register for the auction, and so on, in the case of a sale by public auction;
• the stages of the negotiation, the limits of the negotiation, the over-bidding procedure and so on, in the case of direct negotiation.

In our experience, the sale regulations should, on the one hand, be as comprehensive and detailed as possible and adapted to the type of sale and to the asset being sold and, on the other hand, include clauses allowing the insolvency practitioner to take quick decisions to overcome any deadlocks in the sale procedure. Obviously, the regulations should set the limits within which the practitioner may decide, but we always recommend a degree of flexibility, which is often necessary in complex sales.

For example, a buyer who knows exactly by how much the price will be reduced after each unsuccessful auction will be able to exploit that information. If, however, the regulations leave the liquidator the option of reducing the price, rather than the obligation, the approach changes.

To avoid later disputes, we recommend including in the regulations the by now classic clauses — "the assets are sold as is, where is" —, specifying that, through the opportunity to view the assets, the examination of the documents made available and participation in the auction, the buyer assumes any discrepancy found later, including improper functioning.

We also recommend stating in the regulations that any physical differences in the assets, within a margin of +/- 1-3% of the value, will have no impact on the price or on the sale procedure.

We have in mind, of course, the subject of this article, a complex industrial asset, whose inventory may include, for example, hundreds of tonnes or hundreds of cubic metres of raw materials which, despite every effort, are sometimes almost impossible to measure exactly during stock-taking. Or doing so is too expensive or complicated for the purpose pursued and the minor benefit obtained. Let us not forget the principle of maximising the debtor's estate.

We also have in mind another situation: software licences are often valued, because they have a book value, although they cannot in fact be transferred, being made available to the user only, without a right of resale. This +/- value clause can help, especially if the value of these licences "slipped through" in the valuation and was taken into account when the lists of assets put up for sale were drawn up.

The clause can also work the other way round, when additional assets turn up which have no economic value but are expensive to extract and remove/recycle.

One more aspect we wish to point out is that, given the nature of the assets, it is sometimes necessary to use specialised sales/advertising agents. In such cases, it is preferable to include this possibility in the regulations from the outset, including the range of commission for these agents. Or, at some point, one may wish to use an auction platform other than the UNPIR one or the liquidator's website, for additional exposure. It is good for these approvals to be given already through the vote on the regulations.

The last aspect we wish to address here is charging potential buyers a fee for the sale regulations. Several variants occur in practice: regulations free of charge, possibly with only the cost of copying the documents; regulations for a fee collected by the debtor; and regulations for a fee collected by the liquidator.

Court practice is also inconsistent, some courts requiring a legal basis for charging a fee, especially when it benefits the liquidator. We will not go into this discussion at length, as it is not the subject of this article, and arguments can be made for each approach; but, following another analysis on this topic, our conclusion was that, as long as the creditors approve a payment for the regulations, including payment to the liquidator, this being a decision of expediency on their part, no rule is breached and the decision should not normally be censured by the court. We consider it important, however, to state expressly in the regulations the amount and who collects it.

4. Approval of the sale method: the creditors approve what the liquidator has proposed. How we will actually sell.

The valuation report, the type of sale of the assets and the related sale regulations are subject to the approval of the creditors' meeting⁶. Under art. 156 of Law no. 85/2014, the judicial liquidator convenes the meeting within a maximum of 15 days from the date the valuation report is filed with the case file. The law does not provide an express sanction for failure to meet this deadline, but we recommend preparing the draft regulations in advance in order to be able to meet it.

Unlike the vote on the reorganisation plan, which is fairly complex and by category, the valuation and the sale procedure are approved by a majority vote of the creditors present, and the meetings of the creditors' meeting are held in the presence of holders of claims totalling at least 30% of the total value of the claims with voting rights over the debtor's estate⁷. In practice, this voting method can sometimes lead to situations in which creditors with no practical interest in the sale decide how it will be carried out — for example, other creditors decide instead of the secured creditor, who will collect the entire price even in the event of a highly successful sale.

The resolution of the creditors' meeting is filed with the case file and published in the Insolvency Proceedings Bulletin, and may be challenged within 5 days of its publication, under the procedure provided by art. 48 of Law no. 85/2014. In such an action, the syndic judge may annul the resolution strictly on grounds of unlawfulness. As has consistently been held in case law and legal literature, matters of expediency cannot be censured by the judge as long as the creditors have expressed their will and the manner in which that will was expressed was lawful.

The applicable legal provisions regulate who may bring such an action, the time limit for challenging the resolution, the summons procedure, etc., but we wish to point out that a challenge to the resolution of the creditors' meeting does not suspend the sale procedure, according to court practice and the majority opinion in legal literature, even where what is actually being challenged is the liquidator's measure to start the sale, as approved by the meeting.

By way of example, in its interlocutory judgment of 15.05.2025, the Bucharest Tribunal held that: "Thus, in the specific case, it is irrelevant that the liquidator proposed the manner of sale of the assets, once it was approved by the Creditors' Meeting, which considered it appropriate for its interests. Once adopted, it represents nothing other than the will of the creditors as expressed in that resolution. (...) Therefore, although the creditor stated that it was seeking the suspension of a measure taken by the judicial liquidator, in reality it seeks to suspend the effects of the resolution of the Creditors' Meeting of 27.05.2024. (...) where the legislature wished to allow the suspension of a contested measure pending the resolution of the challenge brought against it, it provided so clearly. (...) On the other hand, apart from the fact that this remedy is not expressly provided by law, the Tribunal also considers that it is incompatible with the law (...) In this context, the need to respect the claimant's rights as a creditor in the proceedings (the ground on which it based its application for suspension) cannot be relied upon to conclude that the suspension procedure is admissible, given that the measure requested and ordered by the syndic judge conflicts with the principle of speed governing insolvency proceedings (...), according to which the bodies applying the procedure must ensure that the acts and operations provided by law are carried out promptly"⁸.

The legal procedure for proposing and approving the valuation and the sale regulations (which set out the type of sale) is fairly clear, being expressly regulated by the insolvency law.

In addition, we recommend discussing the main terms of the regulations at least with the main creditors before formally proposing them, in order to avoid delays in the approval procedure; after all, it is the creditors' interest at stake, and it is natural to discuss with them before the regulations are proposed.

We also wish to say a few words about overly strict sale regulations, which in fact block the possibility of selling. A provision limiting the reduction of the minimum sale price to tiny percentages after unsuccessful auctions, leading to dozens of fruitless auctions, cannot possibly be in the creditors' interest or respect the principle of maximising the debtor's estate or that of speed.

From this perspective, we welcome the option floated in recent proposals to amend the insolvency legislation, namely that, where the sale has not been approved or has not taken place within a limited period set by the legislature, the provisions of the Code of Civil Procedure on enforcement would apply automatically — more precisely, the possibility of a quick sale at the highest price offered. It would be a step forward compared with the current provision of art. 156 para. (2) of Law 85/2014, which is not much used in practice, perhaps because no one has yet established what a "reasonable time" means.

It seems drastic and may, of course, lead to abuse in certain cases; but, on the other hand, trying to sell an asset for years, with all the associated costs, ultimately benefits neither the creditors, nor the sound administration of justice, which is burdened with one more case, nor even the state, which should be interested in the asset re-entering the productive circuit rather than rusting while waiting for the perfect sale.

5. Publicity formalities. Publicity does not just mean publishing a notice in a "widely circulated newspaper".

Once the resolution of the creditors' meeting approving the sale and the related sale regulations has been adopted, under art. 156 para. (4) of Law no. 85/2014: "The assets shall be sold after the judicial administrator/liquidator has published the sale notices in a widely circulated newspaper (...)".

At the same time, under art. 154 of Law no. 85/2014, the insolvency practitioner must take all steps to expose the assets being sold to the market in an appropriate manner, in order to maximise the value of the debtor's estate.

The insolvency law requires the publication of a notice on the auction website administered by UNPIR (https://www.licitatii-insolventa.ro/) and in a widely circulated newspaper, as publicity formalities prior to the sale of the assets. These are the minimum steps to be taken, and the insolvency practitioner is advised to supplement them with any other means it considers appropriate and possibly better suited to the times we live in. The phrase "widely circulated newspaper" is, unfortunately, becoming increasingly meaningless.

We consider it appropriate to also publish notices on the insolvency practitioner's own website and in the Insolvency Proceedings Bulletin, to post the sale notice at the address of the asset being sold and possibly at the town hall of the administrative-territorial unit where the industrial asset is located, as well as in specialist publications.

Publicity can also be supplemented by direct communication to relevant parties: real estate agents, business consultants, investment/venture capital funds, relevant players in the debtor's market, former business partners, suppliers of the debtor's equipment, former competitors, targeted advertisements on social media platforms, etc.

Depending on the cash available in the debtor's estate and with the creditors' approval, sales agents may also be hired, for a fixed fee or a commission on the sale.

In conclusion, we believe that appropriate market exposure, even over-exposure, is the best course of action for high-value assets; publicity and the widest possible dissemination of information about the sale are extremely important from two perspectives. First, they can lead to a price considered good by all concerned; second, they protect the liquidator against accusations that may arise if the asset is sold at a price lower than the valuation estimate — a situation that is far from rare.

6. Conducting the sale procedure. Award / designation of the buyer. Essential stages.

The actual sale procedure normally involves several successive stages, the essential milestone being the award of the assets to a buyer (or the designation of a buyer, if the procedure is a direct negotiation), and usually ends with the issuing/signing of the sale documents and the handover of the assets.

The sale procedure is the one approved through the regulations; we will not return to it, but merely recall that a sale carried out in accordance with what the creditors approved is always preferable. Requests by participants in the procedure to depart from the provisions of the regulations or to add to them open the door to arbitrariness and to challenges that can block the sale for years.

A degree of flexibility is advisable, but one expressly provided for by the regulations (precisely for this reason we recommend approving regulations that leave certain aspects to the liquidator's discretion within a margin of appreciation); accepting requests that clearly go beyond the letter and spirit of the regulations is not advisable.

We give an example frequently encountered in practice: the regulations provide for payment of the price within x days and a deferral of payment is requested. It does not seem very serious, especially where there is only one participant in the sale procedure, but there is always the possibility that another potential participant may come forward claiming to have suffered harm — had it known from the outset of the longer payment period, it would also have taken part in the procedure and might have won. We will not venture to predict the outcome of such litigation, but we believe it is preferable to have a flexible provision in the regulations, e.g.: "the payment term is x days. It may be extended by decision of the liquidator, but by no more than y days.". You cannot regulate every possible situation, but at least the most common ones can be covered by flexible provisions in the regulations.

A. The sale procedure usually involves:

1. Providing access for viewing the assets being sold. In this respect, art. 156 para. (4) of Law no. 85/2014 provides: "(...) Interested persons may inspect the assets offered for sale after the sale notices have been published".
2. Submission of the documents required by the sale regulations and their careful verification, requesting additions and clarifications where necessary, and registration of the interested persons for the sale procedure.
3. Conducting the auctions or going through the negotiation stages set out in the sale regulations.
4. Award of the assets or designation of a buyer.
5. Drawing up the deed of award. Under art. 158 para. (2) of Law no. 85/2014: "If the assets are sold by public auction, the award report signed by the judicial liquidator constitutes title of ownership (...)". This does not mean that no invoice is issued, or that a notarised deed is not required for immovable property. Both the invoice and the notarised form of the contract for immovable property are required, in addition to the deed of award.
6. Going through any pre-emption procedures, where applicable. Here we recommend that the entire procedure for respecting the pre-emption right be detailed in the regulations, in order to avoid deadlocks/litigation.
7. Payment of the price, under the terms of the regulations.
8. Preparing for the closing of the transaction, i.e. sending the documents to the chosen notary. For immovable assets, a notarised contract must be concluded before a notary public, in accordance with art. 158 para. (2) of Law no. 85/2014. We recommend that the regulations provide that the notary will be chosen by the liquidator, so that a notary familiar with insolvency procedures can be used, avoiding a great deal of unnecessary bureaucracy.

B. Obtaining the approvals required before completing the sale, and steps under anti-money-laundering legislation.

Depending on the type of activity carried out by the debtor or the value of the investment, completing the sale of an industrial asset (among others), including in bankruptcy proceedings, may require additional steps, namely obtaining prior approvals/clearances from the competent authorities; we list a few by way of example:

I. The clearance of the Commission for the Examination of Foreign Direct Investment (CEISD)⁹ and the decision of the Competition Council, in accordance with GEO 46/2022¹⁰ and Competition Law no. 21/1996, and with Regulation (EU) 2019/452¹¹.

As a rule, such clearance is required for investments exceeding EUR 2,000,000 or, even for a lower value, for those concerning assets in strictly regulated sectors which may have an impact on security or public order.

This procedure must be taken into account: obtaining the clearance can take 3-4 months, and the application is filed by the buyer. When we say it must be taken into account, we mean that it would be useful to include it in the sale regulations as a separate stage. If the regulations did not provide for this procedure and state, for example, that the price will be paid and the notarised sale contract signed within 30 days, while the clearance procedure takes 3 months, problems that are difficult to manage may arise.

II. Art. 10 para. (1) read together with art. 15 para. (2) let. a) of GEO no. 195/2005 on environmental protection establishes the obligation to notify the Environmental Protection Authority. The environmental assessment report.

This obligation lies with the operators of activities subject to environmental regulation through the issue of an environmental permit or an integrated environmental permit, which are about to carry out, or be subject to, for example, an asset sale, liquidation, bankruptcy or cessation of activity.

The notification to the authority must be accompanied either by the specific permits, if in force, and in many cases by an environmental assessment report, which may be drawn up by an expert accredited for the type of study required and for the debtor's field of activity. The expert is appointed in accordance with Law no. 85/2014, with reference to art. 62 para. (6) of Law no. 85/2014.

Following the notification, in accordance with art. 10 para. (1¹) of GEO no. 195/2005 on environmental protection, the environmental authority informs the parties of the environmental obligations they must assume.

We recommend consulting the list of experts before submitting the matter to the creditors for approval; it can be accessed at the following link: https://regexp.ro/pages/lista-experti.

We draw attention to the fact that, under art. 10 para. (4) of GEO no. 195/2005, priority is given to the fulfilment of environmental obligations where assets are sold in bankruptcy proceedings.

III. In accordance with Law no. 111/1996¹², the transfer of assets containing nuclear/radiological sources requires authorisation.

In this respect, under art. 4 para. (1) of Law no. 111/1996, the National Commission for Nuclear Activities Control (CNCAN) is a competent authority in the nuclear field, exercising regulatory, licensing and control powers, and the notification is therefore sent to it.

Although it may seem an obligation rarely encountered in practice, our experience has shown that it is more common than we thought: for example, any installation or device involving the use of a radioactive source is subject to this regime — including small, portable devices used in various industries, for example to inspect welds.

We also emphasise that each of the public authorities and institutions involved chooses its own means of communication (by post, electronically, in person at their offices, or through dedicated applications), so the insolvency practitioner must be open to streamlining communication and fulfilling these obligations under the conditions required and set by each of the third parties involved. It must also bear in mind the duration of these procedures, which sometimes have to be completed before the sale.

IV. Compliance with the legislation on preventing and combating money laundering — Law no. 129/2019

The judicial liquidator's obligations under the legislation on preventing and combating money laundering in the context of the sale of assets in bankruptcy are rather specific, because the liquidator is in a dual position: a) it is a professional subject to the anti-money-laundering regime, as an insolvency practitioner; b) it has due diligence obligations in relation to the transactions it carries out in the bankruptcy proceedings.

Under art. 5 para. (1) let. f) of Law no. 129/2019, insolvency practitioners are included among reporting entities. In this capacity, the liquidator must:

• apply customer due diligence measures when selling assets, including identifying and verifying the buyer and the beneficial owner (the natural person who controls the purchasing company);
• verify the source of the funds used by the buyer, where the transaction raises suspicions;
• report to the National Office for the Prevention and Combating of Money Laundering (ONPCSB) transactions suspected of money laundering or terrorist financing, regardless of their value;
• document the transaction and keep records for at least 5 years (contracts, identity documents, bank statements).

C. Concluding the sale contract and issuing invoices

Obviously, industrial assets as a rule comprise both immovable and movable assets.

Where immovable assets are sold, the contract will be concluded in notarised form and the related invoices will be issued¹³. Under art. 158 para. (2), second sentence, of Law no. 85/2014, where "(...) the law requires the notarised form for the transfer of ownership, the contracts shall be concluded by the notary public on the basis of the auction report".

Where movable assets forming part of the industrial asset are sold, the related invoices are issued in accordance with the tax rules. Under art. 158 para. (2), first sentence, of Law no. 85/2014: "If the assets are sold by public auction, the award report signed by the judicial liquidator constitutes title of ownership (...)".

As regards the invoices for the assets sold, we make the following recommendations:

• to avoid problems when drawing up the invoices and sending them to the buyer through the accounting software and the e-Invoice (E-factura) platform, the information in the debtor's accounts should be reconciled from the outset of the sale procedure with that in the public records (land register, local tax department, etc.);
• where differences are identified between the debtor's records and the public records, the steps needed to update the information should be taken before the transaction is completed, as this is time-consuming and the short deadlines for drawing up and sending invoices are insufficient;
• given the obligation to send invoices through E-factura within 5 days of their issue¹⁴, we recommend not leaving the upload until the last of those 5 days, as problems may arise. Invoices with hundreds or thousands of product lines are difficult to upload and sometimes produce errors; from this perspective, uploading may be difficult, especially given the relatively limited upload period.

We recommend that the accounting records be checked and compared with the public records as early as the stock-taking, so as not to risk going through the entire procedure with incomplete, insufficient or partially updated information.

We have also observed in practice that some notaries require the seller (the bankrupt company) to present a tax clearance certificate in order to notarise the sale contract.

Since the sale takes place in bankruptcy proceedings, we consider that art. 159 para. (7)¹⁵ of the Fiscal Procedure Code is fully applicable, under which such a document is not required for sales carried out in enforcement, insolvency and liquidation proceedings.

D. Handover of the asset.

The assets are handed over on the basis of a handover report, recording utility consumption at the time of the handover/transfer (such as water, electricity, natural gas, etc.) and the handover of all keys, access codes and user manuals.

At the same time, the title deeds (in original or, where applicable, in copy), technical data sheets, building logbooks, if any, plans of buildings and installations, architectural drawings and any existing technical documents will be handed over on the basis of a detailed schedule.

Movable assets will be handed over together with user manuals, safety data sheets, warranty certificates, registration certificates, technical logbooks, keys and access codes, etc.

Because physical differences may still be found at handover for various reasons (theft, natural or technological depreciation, various natural phenomena that are hard to control, etc.), we repeat our recommendation that the regulations provide that any minor difference from the initial lists, of 1-3% of the value, will have no impact on the sale or the price.

Handover usually also entails the transfer of liability for the assets to the buyer; for this reason it should not be postponed, especially where the assets are not insured — a frequent situation, owing to the lack of resources in the procedure.

7. Steps after the sale. The handover of the assets is not (quite) the last stage.

Signing the sale documents, collecting the price and handing over the assets does not mean that the sale procedure has ended. We consider the following stages to be essentially linked to the sale procedure; they must be completed before the sale can be considered finalised and the distribution of the proceeds and the payment of fees can begin.

A. Payment of the 2% contribution to the liquidation fund administered by UNPIR

Under art. 39 para. (7) of Law 85/2014, the liquidation fund is financed by a 2% levy on the amounts recovered in insolvency proceedings, including the funds obtained from the sale of assets from the debtor's estate, this being considered a procedural expense.

Art. 73 let. m) of GEO 86/2006 on the organisation of the activity of insolvency practitioners provides that the following constitutes a disciplinary offence: "(...) failure to calculate and transfer, within the first 10 days of the month for the receipts of the previous month, the 2% provided for in art. 4 of Law no. 85/2006 (the reference is to the provision of the previous law on the matter), as subsequently amended and supplemented, from the amounts recovered in insolvency proceedings".

The Statute on the organisation and practice of the profession of insolvency practitioner also provides, in art. 123 para. (4), that "In the case of bankruptcy, the 2% rate applies to any amount collected in the debtor's account. For amounts collected from sales, the 2% rate applies to the amount collected, excluding VAT."

Insolvency practitioners should also pay attention to art. 124 point 15 of the Statute, under which the following constitutes an offence: "failure to calculate and transfer, within the first 25 days of the month for the receipts of the previous month, the 2% provided for in art. 4 of Law no. 85/2006, as subsequently amended and supplemented, and art. 39 of Law no. 85/2014, as subsequently amended and supplemented, from the amounts recovered in insolvency proceedings".

Leaving aside the minor legislative inconsistencies — whether it is 10 or 25 days —, it is certain that the liquidator must calculate and transfer 2% of the price obtained (excluding VAT) to the liquidation fund administered by UNPIR in the month following the receipt of the amounts. Failure to transfer it is a disciplinary offence, and failing to take this amount into account in the report on funds and the distribution plans may lead to a shortfall that is hard to cover.

2% of the amounts obtained may not seem much, but when the amounts to which it applies are large, the error can be significant: it can make the difference between having funds for procedural expenses until the case is closed and running out of money, possibly with legal obligations still unfulfilled (such as an archive not yet handed over), if the levy was forgotten and has to be paid after the distributions to creditors have been made.

We recommend informing the creditors of the obligation to pay this levy, as well as the other major expenses, as early as the discussion on approving the sale price; although the law is clear on this payment obligation, many creditors, especially secured ones, seem surprised after the price is collected that 2% of the amounts received is transferred to UNPIR as a priority and not paid to them.

B. Deregistration from the authorities' records

Within 30 days of the sale of the assets, the debtor must take steps to have the assets removed from the tax roll at the local tax department (DITL). Correspondingly, the buyer must register them.

To make registration easier, we recommend issuing separate invoices for buildings and for motor vehicles, alongside the invoices for the other assets. For motor vehicles in particular, given the registration procedure in REMTII (the Register of Registered Means of Transport), an invoice with hundreds of items, including motor vehicles, is not a good idea.

The deregistration procedure also applies to certain special installations: lifts, pressure boilers and lifting equipment (cranes, overhead cranes, vehicle lifts), which fall into the category of equipment subject to the special ISCIR procedure, for example.

C. Completing the procedures relating to environmental obligations

Under art. 10 para. (2) of GEO no. 195/2005, within 60 days of the date of signing/issuing the document certifying the completion of the sale procedure, the parties to the transaction send the competent environmental protection authority the environmental obligations they have assumed, by means of a document certified as a true copy of the original.

This is not merely a reporting obligation: within the period agreed with the buyer and approved by the competent authority, the debtor will fulfil the environmental obligations it has assumed (such as waste disposal, carrying out the necessary tests, etc.). The liquidator must also plan the budget for these operations; costs for decontamination or the destruction of hazardous waste can sometimes be very high.

It is advisable to hire specialists to carry out the work needed to meet the environmental obligations, in which case they will be appointed and their fees set with the approval of the creditors' committee. Sometimes hiring specialists is unavoidable, as certain operations can only be carried out by authorised companies.

D. Terminating contracts with suppliers

As soon as possible after the transaction is completed, in order to maximise the debtor's estate, the contracts for utilities, security, etc. must be terminated or taken over by the buyer.

We recommend starting the termination steps/discussions before the sale is completed, as soon as there is a realistic estimate of the date of handover. The simplest solution is for these contracts to be taken over by the buyer, which overcomes any difficulties relating to notice periods for terminating the contracts.

E. Terminating individual employment contracts

After the assets have been sold, the dismissal of the employees who worked on the asset sold becomes inevitable, and in this procedure the liquidator must bear in mind, for example, the rules on collective redundancies, where applicable.

Under art. 123 para. (8) of Law no. 85/2014, read together with art. 75 para. (1) of the Labour Code, the judicial liquidator may decide to terminate individual employment contracts, giving a statutory notice period of at least 20 working days. In the case of collective redundancies, the time limits are halved.

F. Removing the debtor's archive from the asset sold. Or the remaining assets, where applicable.

The debtor's archive may become a problem if it is stored in the asset sold and its takeover by an authorised archiving company has not already been arranged. The same applies to any unsold assets.

Removing them and storing them elsewhere can consume resources, especially under time pressure.

To prevent such problems, practical experience has shown us that several solutions are possible as regards the archive:

• The historical archive has already been taken over by an archiving company, and the current archive is stored with the accounting firm or the liquidator;
• The regulations provided for a transition period of a few months during which the archive remains on the premises where it is located, with a right of access for sorting and removal, thus allowing time to select the archiving company in accordance with the law;
• The archive is moved, before the premises are handed over, to other premises to which the debtor has access.

There is a discussion to be had about the technical archive, especially for industrial assets, which is subject to a special storage regime. Our opinion is that the entire technical archive, including plans, drawings, operating manuals and technical logbooks, must stay with the equipment and buildings to which it relates, even if the holder of the archive disappears through bankruptcy and the archive should theoretically be handed over to an archiving company.

Handing over this specific archive to an archiving company makes no logical or technical sense: these documents and plans relate to assets still in operation, so we consider that they should be handed over to the new owner of the assets on the basis of a handover report and a detailed schedule. This situation will be notified to the National Archives, but we do not consider that this type of document must be handed over to an archiving company.

As regards the debtor's unsold assets, either the regulations/sale documents require the buyer to keep them for a period, possibly until they are sold, or they are removed.

We recommend that, for remaining assets that clearly have no economic value — a situation possibly established through the valuation —, with the creditors' approval, they be urgently scrapped and sold as recyclable materials where possible. Guarding, handling and preserving them often costs more than could be obtained by selling them.

We recommend, of course, regulating as clearly and as early as possible the situation of these remaining unsold assets physically stored in the premises sold; leaving the matter to chance can give rise to later disputes that consume time and energy.

Conclusions

In this paper we have tried to present, schematically and stage by stage, what the liquidator's work involves when selling a complex asset, drawing on our personal experience of selling an industrial asset.

We could not cover all the stages in detail, nor all the variables that may arise — that would probably be material for a book if all possible aspects were to be covered —; we have only listed the activities we consider essential and, where appropriate, pointed out practical aspects that the liquidator would do well to bear in mind.

The material is not meant to be exhaustive; the experience of other colleagues can certainly add stages or procedures to those we have set out. But we believe it is useful both for those facing such a procedure and for creditors and courts, which, not always having access to the "inner workings", may not perceive the full complexity of such an undertaking and why it is so easy for things sometimes not to go as quickly and simply as we might expect.

As we said at the outset, the sale is a complex procedure with many actors involved; following these stages and coordinating the actors involved is a laborious process, requiring rigour, knowledge of the legal rules and of the necessary steps, management and coordination skills and, of course, realistic expectations as to the time needed to complete the process.