"The Court remained today in ruling on the application filed by the debtor CITY Insurance, which requested the suspension of the process until the Court of Appeal has resolved the appeal filed by the debtor against the ASF decision to withdraw CITY's authorization", the sources said.
The validity of CITY Insurance's policies will depend on this deadline for the bankruptcy proceedings. Basically, the policies will be valid for a maximum of 90 days after the court decides to start bankruptcy proceedings.
The Financial Supervisory Authority (ASF) filed on Tuesday, October 12th 2021, at the Bucharest Court, the request for the opening of the bankruptcy proceedings of the insurance-reinsurance company CITY Insurance SA, considering its state of insolvency. At the first term, on Wednesday, it was decided to postpone the pronouncement until November 17th this year.
If declared in court, CITY Insurance's bankruptcy will become the largest bankruptcy in the insurance industry, as the company was the largest player in the local market, with a share of 20.6% of the total industry (with gross written premiums of over 1.3 billion lei, according to XPRIMM calculations, based on ASF data) and 46.34% of the MTPL segment (1.04 billion lei) in the first half of 2021.
How long are CITY Insurance contracts valid?
Insurance contracts concluded with CITY Insurance SA remain valid until the date on which one of the following situations occurs:
- the date of termination of the insurance contract;
- at the latest 90 days from the date of the pronouncement of the decision to open the bankruptcy procedure according to the legal provisions.
PAD insurance policies concluded through CITY, the insurer being PAID Romania, cannot be terminated and remain in force until the end of their validity.
List of practitioners selected for bankruptcy proceedings
According to ASF, the insolvency practitioners approved for the case involving the bankruptcy of CITY Insurance are:
- CONSORTIUM RTZ&PARTNERS SPRL BISTRITA BRANCH, RTZ&PARTNERS SPRL ALBA BRANCH, RTZ&PARTNERS SPRL BUCHAREST BRANCH, RTZ&PARTNERS SPRL CLUJ BRANCH, MUSAT&ASOCIATII RESTRUCTURING INSOLVENCY SPRL
- EXPERT SPRL ARAD
- CITR BRANCH CLUJ SPRL
- CONSORTIU DASCAL INSOLVENCY SPRL & MAESTRO SPRL BUCHAREST BRANCH
- MANAGEMENT REORGANIZATION LIQUIDATION IASI SPRL
- ROMINSOLV SPRL
The FGA has so far received approx. 56,900 requests for payment (compensation and restitution) and is currently in the process of registering them, according to the data sent on Wednesday by the ASF.
The amount of compensation requested by the insurance creditors of CITY Insurance SA related to the claims filed so far is estimated at about 530 million lei.
At the same time, the FGA's liquid assets amount to about 630 million lei, so it will probably be necessary to increase the liquidity requirements, as this is the largest bankruptcy in the industry, having a larger scale than the bankruptcies of ASTRA Asigurari and CARPATIC Asig together.
FGA representatives told 1asig.ro, in September, that the Insured's Guarantee Fund has sufficient resources to start payments to CITY Insurance's insurance creditors and, if necessary, has all the legal means to supplement its liquidity needs.
According to the legislation, FGA can initiate the payment of insurance claims of insurance creditors of SAR CITY Insurance SA within 60 days, calculated from the date of publication of the ASF decision on the insurer in the Official Gazette. Basically, the FGA will start payments to CITY Insurance claimants on 29th November 2021.