Government giving fourth chance to reach pre-bankruptcy settlement

The government on Thursday passed a regulation introducing into the law on financial operations and pre-bankruptcy settlement changes that were expected to facilitate pre-bankruptcy settlement proceedings and increase the number of saved companies, raising the number of pre-bankruptcy settlement attempts from three to four.

Finance Minister Slavko Linic said 4,932 pre-bankruptcy settlement requests had been made, with claims totalling HRK 47.8 billion and 41,000 employees in said companies.

He said 3,837 cases had been processed, of which 3,065 had been dismissed and 787 approved. Of those, 168 had been settled in court, while 619 were nearing completion. Those companies employ 12,580 people and the claims involved exceed HRK 12 billion.

The figures show that the crisis is very deep and that most companies seeking a way out through pre-bankruptcy settlement cannot be saved, and they are mainly small companies, said Linic.

He said the time it took to adopt a restructuring plan and creditors to reach an agreement was 60 days on average, after which commercial courts closed a settlement procedure in 58 days. He said the proceedings lasted 120 days on average from beginning to settlement.

Linic said the government raised the number of pre-bankruptcy settlement attempts from three to four because in some proceedings creditors and debtors, after three failed attempts, managed to come closer to an agreement and could reach a settlement in a fourth attempt.

The changes additionally regulate reports on debtors' financial situation and operations, the deadline for the submission of financial restructuring plans, and subsequent claims.

The regulation stipulates that when a pre-bankruptcy settlement fails, the Financial Agency has the obligation to file for the bankruptcy of the company in question.

Linic said pre-bankruptcy settlement proceedings had helped the economy. He recalled that illiquidity had reached HRK 44.7 billion in 2012 but that according to the latest data it had dropped to HRK 35.1 billion.

(Hina)



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