24. Dec 2017
The National Assembly of the Republic of Serbia adopted the Law on the Amendments to the Law on Bankruptcy (“Off. Gazette of the RS”, no. 113/2017) (hereinafter: the Law), on 14 December 2017. The Law shall enter into force on 25 December 2017 and it is envisaged that all by-laws adopted based on the authorities of the previous version of the Law shall be harmonized with the provisions of the Law within six months of its entry into force. The bankruptcy proceedings which have not been completed by the date of entry into force of the Law, shall be terminated under the previous regulations.
The main objectives to be achieved by the Law are – a larger extent of the creditors’ settlement, a reduction of the costs of the proceedings, as well as a shorter duration of the bankruptcy proceeding itself.
With regard to the abovementioned, some of the most important amendments to the Law on Bankruptcy involve the improvements in the position of the secured and lien creditors. Thus the secured creditors, regardless of whether they have filed their claims by the date of creditors’ hearing, elect one member of the creditors’ board to be from the group of secured creditors. The voting is performed in such manner that the secured creditors shall vote in proportion to the amount of the claim for which the bankruptcy judge determined a likelihood of settlement, and the decision shall be made by the majority of votes of the present secured creditors. The Law also introduces the possibility of the abolishment of the security measures which prohibit or temporarily postpone the enforcement procedure against the bankruptcy debtor, including the prohibition or temporary postponement which affects the rights of secured and lien creditors in connection with the secured assets. In this manner, secured and lien creditors have the possibility to conduct the procedure of settlement of their claims from the secured property. Furthermore, leasing the assets of the bankruptcy debtor encumbered by secured or lien rights is now limited by the consent of the secured and lien creditors in case when the subject of lease is encumbered by the secured or lien right.
The new provisions of the Law also affect the authorities of the bodies in bankruptcy proceeding. The creditors’ board now reaches the decisions by a simple majority of votes of the creditors who are present and who vote, rather than the qualified majority as it had been stated in the previous provisions of the Law on Bankruptcy. The creditors’ board may dismiss the bankruptcy administrator and elect a new one throughout the entire duration of the bankruptcy proceeding, without the obligation to prove any violation of the regulations.
The Law is also focused on the harmonization with the existing positive legal regulations, thus regulating the question of who can perform an assessment in the bankruptcy proceeding. In this regard, it is defined that the authorized expert (appraiser) in the bankruptcy proceeding must be a person who possesses a license to perform the appropriate type of assessment in accordance with a special law, primarily in accordance with the Law on licensed appraisers on the real estate value, which came into force on 6 January 2016.
The Law also introduces many novelties regarding the provisions which regulate the procedure of reorganization in bankruptcy, as well as the preliminary bankruptcy proceeding in accordance with a prepackaged reorganization plan.
It remains to be seen in practice whether the new Law on Amendments to the Law on Bankruptcy shall justify the expectations of the legislator and in this way lead to a faster and more efficient bankruptcy proceeding.