The Law on Amendments to the Bankruptcy Law also makes changes related to pre-bankruptcy settlements. In today’s article, Confida Croatia explains in more detail the changes that have occurred in connection with the pre-bankruptcy settlement.
The aforementioned law is being amended for the second time and most of it entered into force on March 31, 2022. The goal is to remove obstacles that prevent viable companies in financial difficulties from accessing effective national frameworks for preventive restructuring and continuing operations. There is also the provision of a second opportunity, i.e. enabling debt relief after a reasonable period for insolvent or over-indebted entrepreneurs. It is added as a goal to improve the procedures related to restructuring, insolvency and debt relief.
Early warning of debtors
The debtor is provided with access to a clear and transparent early warning system for circumstances that could lead to a threatening inability to pay. Thus, he is warned that it is necessary to act without delay. The debtor can also use counselling services provided by public or private organizations.
The employer is obliged to inform the workers at least once a year about news regarding the early warning system as procedures and measures related to restructuring and debt relief.
In the case of the probability of insolvency, the director’s duty is to take into account the interests of creditors, shareholders and other persons with a special interest, then to take measures to avoid insolvency and to avoid actions that intentionally or negligently endanger the viability of the business.
Data collection
The Ministry responsible for judicial affairs will collect and generate on an annual basis and at the national level data on procedures related to restructuring, insolvency and debt relief. It will also collect and generate data on the number of entrepreneurs who started a new business after the procedure and on the number of lost jobs related to these procedures.
Claims determination
The rules on the presumption of filing a claim are deleted, which means that all creditors must report their claim in the pre-bankruptcy procedure, regardless of whether the debtor has included it in the financial statements.
The deadline for filing claims of pre-bankruptcy creditors remains the same, which is 21 days from the date of delivery of the Decision on the opening of pre-bankruptcy proceedings.
Changes in voting on the restructuring plan
If the creditors do not submit a voting form or a form from which it can be unequivocally determined how they voted by the start of the voting hearing, then they will be considered to have voted for the restructuring plan. Creditors will be deemed to have accepted the restructuring plan if in each group the majority voted for the plan and the sum of claims of creditors who voted for the plan exceeds twice the sum of claims of creditors who voted against the plan.
If the majority in a certain group is not reached and other prerequisites for confirmation of the plan are met, then the decision is made by the court.
Limitation of the duration of suspension of enforcement proceedings
It is anticipated that the day of the opening of the pre-bankruptcy proceedings will result in the suspension of enforcement and insurance proceedings. There is also a ban on initiating new enforcement and insurance proceedings against the debtor for 120 days.
Suspension and conclusion of pre-bankruptcy proceedings
The pre-bankruptcy procedure must be completed within 120 days from the day of opening at the latest. The court has the option to extend the deadline for a maximum of another 180 days if it considers that progress has been made in the negotiations on the restructuring plan and that there is a probability of a successful conclusion of the procedure.
