The National Assembly of the Republic of Serbia enacted the Law on amendments and additions on the Bankruptcy Law on August 2, 2014. The Law was published in the Official Gazette of the Republic of Serbia on August 5, 2014 and came into force on August 13, 2014. The Law introduces some new solutions in order to resolve main problems in practice, which have been recognized under the provisions of the previous law.
The Law regulates conditions for becoming a bankruptcy administrator and stipulates stricter rules concerning their responsibility and material liability. It should contribute to the professionalization of bankruptcy administrator and provide mechanisms for supervision of their work.
The new law also tightens liability for damages, stating that indemnification claims shall be subject to statute of limitations after a period of three years from the moment of removal of the debtor, and/or the bankruptcy estate from the register, or from the final decision confirming a reorganization plan.
A significant novelty is that the Law differentiates between a secured creditor and a pledgee. Both of them, the secured creditor and the pledgee hold a security right, a statutory right of retention or a right to satisfy their claims from assets or rights registered in public registers or books, but the pledgee does not have a claim against the bankruptcy debtor. Furthermore, the pledgee is not a secured creditor, nor a bankruptcy creditor, thus he cannot be appointed to the creditors’ assembly and the creditors committee.
Another important innovation is a new rank of the bankruptcy claim satisfaction according to the Law – the forth rank. This rank contains claims from legal entities related to the bankruptcy debtor based on loans or similar transactions that became due two years prior to the opening of bankruptcy proceedings. The law also stipulates that pledges provided by the bankruptcy debtor to the related entity within a year before opening the bankruptcy proceedings have no legal effect.
Furthermore, the Law also introduces a new rule when the value of secured assets is lower than the value of a secured claim of the secured creditor, in which case the bankruptcy judge shall render the decision upon request of the secured creditor which will suspend the moratorium to allow the creditor to exercise the rights in the secured property.
Moreover, the intention of the lawmaker to prevent the abuse of the bankruptcy debtor and his affiliates is clearly visible in the provisions pertaining to the reorganization plan. The related entities now belong to a special class of creditors and thus cannot vote for the reorganization plan.
The Law specifies that bankruptcy proceedings which had not been completed before the Law comes into force shall be completed in accordance with the provisions of the previous Law.