Advantages and Disadvantages of the New Bankruptcy Law

In one year, the bankruptcy law has introduced order by eliminating ‘zombie companies’ and prevented manipulations with pre-bankruptcy proceedings. However, the weaknesses of the new regulation are already becoming apparent. Legal experts propose amendments that could prevent new problems. You can read more about the bankruptcy law in the new issue of Lider, and now we present the advantages and disadvantages of the law.

Advantages: • Debtors can no longer abuse pre-bankruptcy proceedings • No more agony with long blockages • Many companies whose debts were uncollectible have been erased

Disadvantages: • Limitation to four auctions and capping the value of assets • No auction without an expert assessment of the assets • Fina does not send information to the court and the bankruptcy trustee about the auctions • A price reduction of 25% in the next auction in too many bankruptcy cases excessively devalues the bankruptcy estate • The shortened procedure due to unpreparedness often triggers the initiation of liquidation proceedings • The company in bankruptcy retains the old OIB, which can lead to blockage • There is no centralized public announcement of the initiation of bankruptcy • The possibility for the bankruptcy trustee to refuse to take over the case without consequences • Difficulties in opening regular bankruptcy proceedings are yet to be expected.

How to improve the bankruptcy law? • Courts should be obliged to send the bankruptcy judge data on the bankruptcy debtor’s real estate from the Land Registry • Correspondence to companies in bankruptcy should only be delivered to the address of the bankruptcy trustee • Existing bank valuations should be taken as asset value assessments as an alternative solution if an expert cannot be paid • Judges should independently choose bankruptcy trustees who can refuse only a few cases.