Service company becomes first business to reach out-of-court debt settlement, authorities say

A private services company with arrears of nearly 700,000 euros became the first business to reach settlement under a new out-of-court process for outstanding debts, officials said on Tuesday.

The company had outstanding debts to private vendors and the state. The state offered an 85% cut in fines, and repayment of the rest in 120 installments. Two of the three private vendors accepted installments spanning over three years, while the main supplier will be paid immediately.

“This case proves that even negotiations involving the help of the state and flexibility by smaller vendors can make a debt viable, therefore allowing a company to continue operations, saving jobs,” said officials of the special secretariat for management of private debt, a government agency.

Data showed that businesses have shown increasing interest in the “Out-of-Court Settlement of Debts of Businesses” process since the online platform was activated on August 3, 2017. The site registered over 110,000 unique “hits” since it was activated, with 15,310 businesses registering for the process. Of these, 5,044 have already completed the first steps prior to submitting their applications. The agency has already approved the eligibility of 2,654 legal entities.

Of completed applications (497), 148 relate to two parties. Of these, 26 did not succeed in reaching agreement, while 14 have come under a repayment plan. Most of the 148 relate to social insurance debts, where the debtors have been offered a write-off of fines and fees and a repayment plan of the remainder in 120 installments.

Of the remainder 349 applications, involving multiple parties, 322 have been assigned to coordinators who have initiated file reviews on documentation provision. Most are ready to begin the process of negotiation, and nearly 90 have begun so.