The Serbian Ministry of Economy formed a working group to draft an act that will regulate the bankruptcy of entrepreneurs (the “Draft“) following the Program for resolving problem loans for 2018-2020 of the Government of Serbia (the „Program“). Serbian bankruptcy legislation should now be complete since the Bankruptcy Act does not provide for a procedure in which creditors of an entrepreneur could collectively settle their claims. The view of the Government of Serbia stated in the Program, is that bankruptcy in the case of entrepreneurs should be regulated in a way that it could be carried out quickly and efficiently so that both creditors and debtors are motivated to initiate the proceedings in a timely matter, and also, that there should be no distinction between business-related debts and other debts. This can also be interpreted as an indication that we could expect personal bankruptcy regulations soon.
Serbian bankruptcy law is already familiar with the bankruptcy of entrepreneurs – the Bankruptcy Procedure Act of 2004 provided that companies and entrepreneurs can be bankruptcy debtors. The Bankruptcy Procedure Act was replaced by the Bankruptcy Act in 2009 and the Serbian legislator officially gave up on the idea of the bankruptcy of entrepreneurs.
Why is the bankruptcy of entrepreneurs a hot topic now for both business and the general public, and what solutions and consequences can we expect to see?
In practice, it means that overindebted entrepreneurs, as natural persons, will not be able to avoid compulsory settlement of claims. The management of an entrepreneur’s bankruptcy will be entrusted to an administrator, who will be an equivalent to a trustee in company bankruptcy procedures. The bankruptcy of entrepreneurs could be listed as an additional category of bankruptcy proceedings in the Bankruptcy Act. However, we could not rule out the possibility that there will be a special law enacted regarding the bankruptcy of entrepreneurs.
What are the circumstances under which it could be possible to initiate bankruptcy proceedings against an entrepreneur? The members of the working group are currently discussing the condition that the debt of an entrepreneur would need to exceed EUR 50,000.
It remains to be seen whether the abovementioned predictions will be included as provisions in the Draft legislation. Furthermore, there is the question of whether the solutions from the Draft will „survive“ the parliamentary procedure and what the bankruptcy proceedings for entrepreneurs in Serbia will look like in the end. It is clear that the Companies Act will be the first act to undergo amendments since it regulates the legal form of an entrepreneur. Finally, it is expected that the regulation of the bankruptcy of entrepreneurs will affect the entire field of civil law to regulate the legal affairs of natural persons which could be associated with legal situations that could arise when a bankruptcy procedure against an entrepreneur is initiated and completed.
