€30.000, – is no chicken feed!
What do you do when after years of a healthy business relationship, your customer goes bankrupt? This happened to our Dutch client supplying animal products to a Romanian customer.
For over three years, business among the two parties was a steady and smooth process. But at a certain point, the payment of the invoices was delayed. Thinking not much of it, the Dutch company continued doing business, even though the payment term was getting longer and longer. Our client patiently continued to wait, assuming it was nothing serious since both parties shared a healthy relationship. The creditor never chased the Romanian debtor until they stopped paying altogether.
The Dutch creditor informed the Romanian managing director and requested them to pay the invoices as soon as possible. However, very surprisingly the director indicated that he had no intention of paying. His company had been declared bankrupt, which meant that he no longer had the financial means to pay the outstanding invoices.
This came as a huge shock to the Dutch company. With more than €30.000, – in outstanding invoices the customer only now claimed to have been declared bankrupt. With a bankrupt customer, the Dutch company believed it was a done deal and that nothing could be done to recover the amount. Until the case was transferred to our Romanian lawyers, who specialise in Romanian insolvency law.
It turned out that the Romanian debtor was declared bankrupt some time ago. Although the Romanian company was in the middle of a restructuring process, they continued to place orders with the Dutch company. By law, this was neither allowed under Dutch nor Romanian legislation.
Under Romanian law, the company should have publicly announced it had been declared bankrupt. Also, it is compulsory to let people know that a company is in the middle of bankruptcy proceedings, with adding 'in reorganizare judiciara' in both the email signature and in all other correspondences. This could have been posted on their official website or should have been mentioned in the managing director’s email signature.
Because that had not happened in this case, our Romanian lawyer found that the director could be held personally liable for the outstanding debts. The managing director was informed that if the invoices were not paid, our Romanian lawyer would initiate legal proceedings to hold the director personally liable for the debts. Luckily the director did not let the case escalate and the invoices were paid in no time.
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