Recently, in the second half of January 2021, a public debate was held with regards to the Draft of the Law on Amendments to the Bankruptcy Law (hereinafter: "the Amendments"). If all the changes proposed by the Amendments were to be summarized, what they altogether aim at in practice is to improve the efficiency and transparency of bankruptcy procedure as well as to reduce the costs of the entire process, which in practice has so far proved to be one of the largest problems for creditors and other interested parties in this procedure.
The most important changes proposed by the Amendments are presented below, with reference to the effects that such changes could have on the entire bankruptcy procedure and its participants.
Amendment to the principle of urgency of bankruptcy proceedings - The Amendments propose to change the article of the Bankruptcy Law which regulates this principle by adding a new paragraph which prescribes that the principle of urgency also applies to other proceedings before courts and other government bodies in which the bankruptcy debtor is a party.
In relation to the current solution presribed by the Bankruptcy Law, according to which the principle of urgency applies only to a specific bankruptcy procedure, this represents a positive change due to the fact that one of the main reasons for slowing down the bankruptcy procedure in practice - other unresolved proceedings in which the bankruptcy debtor is a party, will now be eliminated for the most part- .
Publication of information in bankruptcy proceedings on the internet - The Amendments stipulate that publications, decisions and other acts of the court are to be published on the website of the Bankruptcy Supervision Agency (hereinafter "the Agency"), which is a very good solution that is not difficult to implement and in practice will contribute to a significantly higher level of transparency of the procedure because all stakeholders, especially creditors will be able to access relevant information about the bankruptcy proceedings at any time. This will have a positive impact on efficiency of the whole procedure. In addition, the obligations of publishing information / advertisements in e.g. high circulation daily newspapers is abolished and instead the obligation of publication on the Agency's website is introduced.
Deadline for filing claims has been reduced - The proposed Amendments reduce the deadline for inviting creditors to file their claims. The decision to open bankruptcy proceedings, according to these changes, stipulates that creditors can file their claims within a period of not less than 15 days, nor longer than 60 days from the date of publication of the announcement of the opening of bankruptcy proceedings in the "Official Gazette of the Republic of Serbia", which is twice as short as the deadline currently prescribed by the Bankruptcy Law (from 30 to 120 days starting from the day of publishing the announcement on the opening of bankruptcy proceedings in the "Official Gazette of the Republic of Serbia").
Electronic sale of assets - Certainly one of the most important innovations proposed by the Amendments is the introduction of the possibility of electronic sale of assets of the bankruptcy debtor, i.e. legal entity. This is a new method of sale in bankruptcy proceedings. The electronic sale itself would take place through the internet portal of the Agency. If the sale is conducted by public bidding or public collection of bids, the bankruptcy administrator is obliged to announce the sale on the Agency's website. So the novelty is to abolish the obligation to advertise in at least two high circulation daily newspapers distributed throughout the Republic of Serbia. Another novelty is that the announcement of sale, in addition to the previous obligatory elements, must also contain information on whether the sale is made electronically through the Agency's internet portal or not.
Such a change would certainly be positive in many ways, because it would raise the level of efficiency and transparency of the sale process and at the same time would reduce the costs of the procedure but also prevent possible abuses which may happen in practice.
New elements of the reorganization plan and pre-prepared reorganization plan - The Amendments envisage new elements to the content of the reorganization plan and pre-prepared reorganization plan by introducing the obligation of an independent expert who will monitor the implementation of such plan and will inform the Agency and creditors about the implementation of that plan.
In addition, the same article contains another change that would authorize the creditors' committee (if constituted) to monitor the implementation of the plan in the interest of all creditors as well as to supervise and control the work of an independent expert, all in order to ensure greater control of creditors over the entire process.
The Amendments also propose to shorten the deadline for scheduling a hearing to decide on a proposal to initiate bankruptcy proceedings in accordance with the pre-prepared reorganization plan and to vote on the plan from 90 days to 60 days, provided that it cannot be held before the expiration of the period of 45 days from the initiation of the procedure.
The proposed Amendments seek to provide conditions for creating a better business environment and more efficient conclusion of bankruptcy proceedings in the shortest possible time. At first glance, it seems that the proposed amendments could largely enable the solution of the problems identified in practice of the application of the Bankruptcy Law, primarily the duration and non-transparency of the bankruptcy procedure. It remains to be seen whether and to what extent these amendments, if adopted, will contribute to the bankruptcy procedure fulfilling its goal, and that is certainly the most efficient and complete settlement of bankruptcy creditors with the lowest possible costs of the procedure itself.
By Boris Baklaja, Partner, and Marko Belic, Attorney at Law, Baklaja Igric Tintor