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Indicators And 3r-Type Measures In Overcoming Financial Difficulties Of Companies

Author

Listed:
  • LuminiÈ›a RUS

    (Finance – Accounting Department, Faculty of Economic Sciences, University of Oradea, Oradea, Romania)

  • Daniela ZÄ‚PODEANU

    (Finance – Accounting Department, Faculty of Economic Sciences, University of Oradea, Oradea, Romania)

  • Carmen SCORÈšE

    (Finance – Accounting Department, Faculty of Economic Sciences, University of Oradea, Oradea, Romania)

  • Sorina MOCIAR-COROIU

    (Finance – Accounting Department, Faculty of Economic Sciences, University of Oradea, Oradea, Romania)

Abstract

In the economic life of companies, various financial difficulties can appear, regardless of their object of activity, domain, geographical area, or geopolitical context. The economic reality proved that managing individual difficulties one at a time has little chance of succeeding; because of this, there are international concerns in establishing the regulatory framework and identifying instruments to ensure that the firm can overcome the financial difficulty. Concerns in this sense have been explicitly mentioned for the first time by the World Bank when Principles for effective insolvency and creditor/debtor regime were established in 2001. Recently, the European Parliament has elaborated the EU Directive 2019/1023 regarding the framework of preventive restructuring, debt remittance, and forfeiture of law, besides measures to increase the efficiency of restructuring procedures, insolvency, and debt remittance, which modifies the EU Directive 2017/1132 regarding restructuring and insolvency. While implementing the EU Directive of restructuring in national legislation, the paper analyses and synthesizes the measures of reorganizing and recovering companies while also considering the required legislative instruments. From a practical aspect, the authors’ contribution concretizes in a set of economic and financial indicators that warn/reveal the state of financial difficulty of companies. Establishing these indicators represents technical aspects that need to be clarified by the national law and the EU Directive, and it constitutes the challenge of readjusting the companies. The faster the intervention, the bigger the chances of salvaging the company. Interest in this topic is growing, given the temporary suspension of the activities of many companies caused by several factors. In the context of the measures taken to prevent the COVID-19 pandemic and increase the costs of raw materials, gas, and energy, the economic evolution is unpredictable and challenging. Considering that we are in the process of modifying the national legislation, the proposed set of indicators cannot be verified on the level of companies that encounter financial difficulties. Therefore, applying and practically verifying these economic and financial indicators will be the subject of subsequent research.

Suggested Citation

  • LuminiÈ›a RUS & Daniela ZÄ‚PODEANU & Carmen SCORÈšE & Sorina MOCIAR-COROIU, 2022. "Indicators And 3r-Type Measures In Overcoming Financial Difficulties Of Companies," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 2(2), pages 153-165, December.
    • Handle: RePEc:ora:journl:v:1:y:2022:i:2:p:153-165
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    Keywords

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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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