01.04.2021

Bankruptcy of Entrepreneurs: Legal Solution on the Horizon

The Law on Bankruptcy Procedure from 2004 foresaw the possibility of initiating and conducting bankruptcy proceedings against entrepreneurs, however, the institute of bankruptcy of entrepreneurs was not applied in practice, therefore, it was abolished by the Bankruptcy Law that was in force from 2010.

The Ministry of Economy, as the competent body for the preparation of the solution which would re-regulate the possibility of bankruptcy for entrepreneurs, formed a working group to draft the law that would regulate this matter (hereinafter “the Draft Law”).

By regulating this matter, the Ministry of Economy follows the Program for solving non-performing loans for the period 2018-2020 (“RS Official Gazette”, No. 105/2018 and 46/2019) adopted by the Government of the Republic of Serbia, which introduces the bankruptcy of entrepreneurs into the legal system of the Republic of Serbia. Also, the Draft Law will harmonize the institute of bankruptcy of entrepreneurs with the EU regulations.

The Draft Law should provide for some kind of bankruptcy trustee or administrator for entrepreneurs, who would be competent and responsible of the inventory of the property of the entrepreneur, and in the future the citizen, his creditors and debts. In addition to the inventory of assets, the administrator would also look for a way to pay creditors from those assets. As in the case of bankruptcy of legal entities according to the valid regulations, in the bankruptcy procedure of entrepreneurs, the write-off of part of the debt would be envisaged.

The goal of regulating the bankruptcy procedure against entrepreneurs is to find an effective solution for their over-indebtedness, and to provide them with the possibility of financial rehabilitation, since their current legal position is somewhere between a natural and legal person.

For more information regarding the bankruptcy of entrepreneurs, contact us at aleksicsasaradnicima@lawofficealeksic.rs or call us at one of the phone numbers below.