“Due to a very sudden and controversial parliamentarian decision that changed the competence of the Courts of Appeal on solving insolvency cases, all work concerning insolvency has stopped recently in Moldova,” reports Cobzac & Partners Partner Daniel Cobzac, “with most of the transactions being suspended.” Simultaneously, to advance the country's EU-integration plans, a lot of new reforms are being made in order to harmonize the country’s legislation with European norms.
“A really big thing happened just a few weeks ago, without any consultation or approval from state authorities, or professionals from this domain,” Cobzac says. “In one session the Parliament passed some changes to the Code of Civil Procedure — and it changed one part of an article that refers to the competence of the Courts of Appeal on solving insolvency cases. From this moment on, the courts of appeal are no longer competent to solve or examine insolvency cases, which is quite a big thing for us, because in the past few years quite a lot of large companies went into bankruptcy due to their inability to solve their debt problems with the banks.” Daniel admits to some frustration with Parliament’s action. "Due to this change, which I say again, was very unexpected, now everything is suspended, the courts cannot make any decisions, and we cannot help our clients for the moment.”
Another problem, according to Cobzac, is the lack of trained judges in the regional (first grade) courts. “This is a very specific kind of litigation, and judges must be instructed accordingly, and currently there are only a few who really know the procedures. The Superior Court of Magistrates, which is the body that regulates the activity of the judges, is making the effort to instruct some new judges quickly, now, but they are very young, and they have no experience — many of them are freshly appointed judges.”
Under these circumstances, Cobzac explains, lawyers from Moldova expect that for the next six months, at least, almost everything concerning insolvency will be blocked, and it will be impossible to conclude bigger transactions. “It will be impossible for creditors to pay their debts and for debtors to restructure properly, and it will also be impossible to sell goods because the decisions of creditors in sale/purchase agreements has to be approved in some case by judges.” As a result, he says, the upcoming period may be fairly discouraging for major creditors.
Still, Cobzac says, “the situation is not hopeless.” He says that the current government, despite all its blunders, has managed to implement laws in the past couple of years which forbid non-transparent share-holders from investing in the country. Pushing out shady, offshore investors, has attracted new international players — mostly banks — to the market. According to him, “39.2% of the third biggest bank of Moldova, Victoriabank, was recently bought by a Romanian bank, Banca Transilvania, which together with the EBRD owns 66.7% of shares. And Banca Intesa Sanpaolo has also acquired shares of Eximbank, which were previously owned by Gruppo Veneto Banca. The fact that all these powerful international banks are entering our market sends a good signal for other players that it is safe to invest in Moldova.” As evidence, Cobzac notes that last year German supermarket giant Kaufland announced plans to open up ten new stores in Moldova, and now it wants to acquire more properties.
Moldova’s government is pro-EU, Cobzac says, despite the fact that the country’s President is pro-Russia, and to further advance the country's potential for eventual accession to the European Union the government is doing everything it can to harmonize its legislation with current EU expectations. “We have witnessed lots of reforms lately, and our legislation is changing on a weekly basis. Recently, for instance, the Law of Interior Commerce was adjusted to EU regulations, the Civil Code was amended, and the Mortgage Law and Insolvency Law changed as well.”
