On 14 December 2017 the National Assembly of the Republic of Serbia adopted the Law on Amendments to the Law on Bankruptcy, which entered into force on 25 December 2017 (the “Law”). The Law will not apply to bankruptcy proceedings that were pending at the time when the Law entered into force.
New institutes have been introduced in accordance with comparative legal solutions, while a number of existing provisions have been further elaborated, with the aim of more efficient conduct of the bankruptcy proceedings and improvement of the settlement of creditors, as well as improvement of the position of secured creditors.
In particular, the position of the secured creditors has been improved by granting the secured creditors the right to participate in the creditors’ committee, one of the members of which will now be elected from the secured creditors’ rank, and the participation of these creditors is ensured in deciding on matters within the competence of the creditors’ committee. In addition, the rules of the bankruptcy proceedings and the conditions under which the secured creditors can be settled from the pledged assets of the bankruptcy debtor outside the bankruptcy procedure have been elaborated to a greater extent as compared to the previous position.
With regards to the reorganization process, certain provisions are further clarified and elaborated in order to harmonize the court practice in that field and to prevent abuse of this mechanism which in practice led to extremely long reorganization procedures at the expense of the creditors. The deadlines for submission of the reorganization plan are clearly set out, while it is stipulated that the reorganization plan can be changed only once, which should also lead to greater efficiency of the procedure itself and better protection of the creditors when the reorganization is in question.
The Law also provides more efficient mechanisms for controlling the conduct of bankruptcy administrators, the participation of authorized appraisers and court experts, as well as certain legal remedies and persons entitled to submit them.
The novelties prescribed by the Law are in line with the regulatory reform implemented in the Republic of Serbia, especially in the field of improving the business environment and stimulating economic growth, while also being harmonized with the Strategy for Resolving NPLs adopted by the Government of the Republic of Serbia in 2015. In addition, the Law follows the solutions from comparative legislation, taking into account the European Union Directive 1346/2000 as of 29 May 2000, which the Republic of Serbia would be obliged to implement in the following period.