(Official Gazette n. 104/2009, 99/2011; federal law 71/2012)
The latest amendments to the Bankruptcy Law were adopted by National Assembly of the Republic of Serbia on the 14th December 2017 and entered into force on the 25th December 2017. Among the most relevant issues brough by the amendment is the easier dismissal of the bankruptcy administrator by the board of creditors, the reducion of the majority threshold for voting for the bankruptcy on the first hearing, the improved position of the secured creditors, the mandatory engagement of the licensed evaluators and finally the possibillity to continue pending arbitration.
In this scenario , legislation sets a framework for the composition of the creditors’ board, for the jurisdiction of the bankruptcy judge, for the bankruptcy administrator restrictions and reorganization plan.
As part of the changes, which include the creditors’ board, it is evident that secured creditors are entitled to elect one member from their class to the board, regardless of whether they submitted their claims until the day of the first hearing. Secured creditors vote for the member from their own order on the first hearing, in proportion to the amount of part of their claims that there is a likelihood of settlement of encumbered assets. Accomplishment probability of these claims is estimated by the bankruptcy judge. Decision on election of a creditors’ board member, among the secured creditors, is made by voting of those secured creditors that are present on the first hearing. The maximum number of board members was also reduced – from 9 (nine) to 7 (seven). It was also reduced the precentage of creditor claims which is necessary to vote for the decision to continue the bankruptcy procedure at the first hearing, from more than 70% to more than 50%. So, it is no logner required qualified, but only a simple mayority of the creditors’ assembly (articles 35, 38, 38a).
The amendments introduce the term authorized professional (appraiser) and define the conditions that the appraiser must fulfill in order to take certain proceeding actions. Appraiser is defined as a professional person who is licensed to take activities such as evaluation, expertise or audit in accordance with the laws that specifically regulates their activity (article 53a).
Once the bankrupcy ruling in reached, the bankruptcy administrator is entitled to start the selling and cashing procedure following the methods set on article 132. According to this provision his actions are in closely connected to the Board of Creditors allowing the later to dismiss the administrator (ultimately at any time of the bankruptcy), based on the Discharge Procedure set by article 32.
The possibity of lifting a ban on the execution of the debtors’ assets secured by the pledge and possibility of compensation of secured creditors, when they buy assets from the bankruptcy debtor was also introduced. Pre-emptive rights of the secured and pledge creditors is expected in the event of a direct agreement sale of assets, secured by these rights (article 136).
Most of the amended provisions are those concerning the possibility of reorganization process in bankruptcy. Certain deadlines connected with a plan of reorganization are tightly regulated and the possibilities of secured creditors of influenceing the plan are expanded. The whole process, that precedes the adoption of prepacked reorganization plan, aims to be more efficient.
The intention of the described changes is clear. However, it is yet to be seen how Serbian courts will apply changes to the Bankruptcy law and what will be the actual impact of changes to this complex area of law.