On today's meeting, the Executive has approved a draft law that aims to set the general framework and procedures for financial recovery of administrative-territorial units in financial crisis or insolvency, Mrs. Ioana Muntean, the Spokesperson for the Executive has announced.

"The legislative act stipulates the way the institutions authorized for the economic and financial recovery of these administrative-territorial units will get involved. It also clearly states the rights and obligations of creditors and the rights and obligations of local public administration authorities to strengthen financial situation and the economic and financial discipline of cities and municipalities in financial crisis or insolvency " the Spokesperson for the Executive has stated.

The Administration and Interior Minister, Mr. Vasile Blaga has stated that the Government asked the Parliament to debate this draft law in emergency procedure. However, Minister Vasile Blaga has mentioned that the legislative act is the result of the activity of an Interministerial Group consisting of representatives of Ministries of Administration and Interior, Justice, Finance and of consultations with the Superior Council of Magistracy, Court of Accounts and with associative structures of local representatives.

The Administration and Interior Minister has presented the financial crisis and insolvency situations, and how to act in these cases.

Thus, the financial crisis is presumed in the following circumstances: failure to pay outstanding liabilities liquid and older than 90 days, exceeding 15% of the annual budget of the administrative-territorial unit, except those under dispute, and situation of nonpayment of salary rights under the local budget of revenues and expenditure, or the budgets of institutions or public services of local or county interest for a period of 90 days.

According to the draft law, the procedure laid down in the financial crisis situation requires five steps:

Ø The Chief (loan) Authorizing Officer, who is mayor or County Council President, convenes the City Council - deliberative authority - and immediately notifies the County Finance Department or that of Bucharest municipality, where appropriate, within 5 working days to declare the crisis.

Ø The local or county council shall decide on the existence of financial crisis and mandates the chief authorizing officer to elaborate a program, a draft recovery plan.

Ø The Chief Authorizing Officer also requests the record of local decision in the local registry for financial crises of the administrative-territorial unit.

Ø The Prefect sets up a crisis committee, which includes representatives of local authority concerned, the public finances and associative structures.

Ø Within 30 days since the adoption of a decision of noticing the financial crisis, this committee will send a recovery plan which compulsorily will include updated presentation of the financial economic situation, measures to provide essential public services provision and which will be determined by Government decision. Measures will be considered to improve management, to increase degree of revenue collection and expenditure reduction, measures aimed at the restructuring of the administrative-territorial unit management and its apparatus.

During the recovery plan implementation, the draft law provides a series of bans, namely the ban on taking measures to increase the financial obligations, such as setting up new services and public institutions and staff hiring.

If for a period of 180 days, there are not outlined the causes that led to the entry into financial crisis, the crisis cessation is noticed. In this situation, the committee set up on the prefect’s request, notifies it by a Decision.

Administration and Interior Minister has stated that throughout the proceedings, the chief authorizing officer is required to provide essential public services to the public.

Minister Vasile Blaga has also explained the provisions included in the draft law on insolvency. Thus, insolvency is presumed in the following situations: non-payment of liquid and due payment obligations older than 120 days, exceeding 50% of the local annual budget of the administrative territorial unit - without being considered those that are in trade dispute - and non –payment of salary rights for more than 120 days after the due date.

In this case, insolvency proceeding may be initiated by any creditor or group of creditors, the mayor or president of the County Council of the administrative territorial unit. At the opening of insolvency proceeding, all legal actions are suspended. "We protect the territorial administrative unit, all judicial or extrajudicial actions to achieve the claims on the administrative territorial unit are suspended," Minister Vasile Blaga has stated.

Also, after opening the insolvency procedure, the legal administrator shall issue a notice to all creditors to mention rights, arrears and debts and to determine the table of the claims.

"All those who have to receive money from the territorial administrative unit set up a group of lenders. Legal administrator with the chief loan authorizing officer, prepare a recovery plan to be approved by the court. The Recovery Plan is being endorsed by the creditors committee, “Minister of Administration and Interior has stated. Minister Vasile Blaga has added that in case of failure in the observance of the insolvency plan by the mayor or the County Council President, the legal administrator may propose the suspension of their attributions. According to the Minister of Administration and Interior, a series of bans specific to the financial crisis situation are stipulated.