The Company of Milanović’s Brother, Modestus, in Bankruptcy

The Commercial Court in Zagreb has opened bankruptcy proceedings against Modestus d.o.o, a company owned by Krešimir Milanović – the brother of former Prime Minister Zoran Milanović, and has called on creditors to submit their claims within sixty days from the company, which was under uninterrupted blockade for 574 days until October last year and had outstanding obligations exceeding 127,000 kuna.

A court ruling has scheduled an examination and reporting hearing for June 6, where decisions regarding creditor claims are to be made.

The bankruptcy proceedings against Modestus d.o.o were initiated at the request of Nova Ljubljanska Banka, after a shortened bankruptcy procedure had previously been suspended. Nova Ljubljanska Banka’s proposal for opening bankruptcy is based on a claim stemming from an enforcement ruling of the Municipal Court in Dubrovnik from October 2014, amounting to a total of 3.59 million euros, increased by applicable interest and procedural costs, and this ruling was made based on enforcement documents securing claims by establishing a lien on real estate and a lien on business shares.

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This claim was acquired by Nova Ljubljanska Banka from LHB Internationale Handelsbank AG based on a contract for assignment and transfer from November 2012.

The initiation of bankruptcy also followed an unsuccessful pre-bankruptcy settlement from 2015 due to debts to creditors amounting to as much as 38.8 million kuna. Most of this debt related to a loan taken in 2007 from LHB Internationale Handelsbank AG, for which, as reported in the media, the apartment of former Prime Minister Milanović’s parents was once under mortgage.

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The bank, in the settlement process, filed a claim against Modestus d.o.o, stating that on the day of the opening of the pre-bankruptcy settlement, the amount owed to them with interest was 4.2 million euros, or 32.7 million kuna. In the proposed financial and operational restructuring plan, Krešimir Milanović and his business partner Josip Džale aimed to permanently establish liquidity and financial stability for the company, specifically to reduce short-term obligations by at least 15 million kuna, but they were unsuccessful in this endeavor.

The company Modestus was founded in 2007 with a share capital of 20,000 kuna as a project company with the primary goal of realizing a residential and commercial building project in Dubrovnik. In the first phase, as emphasized, Modestus planned to purchase construction land in Gruž, for which it primarily used the aforementioned bank loan. In the initiated bankruptcy proceedings, banks have a lien on that land.