Zagreb - The Croatian Parliament amended the Bankruptcy Act on Friday in order to provide more efficient action during the insolvency of businesses as a consequence of special circumstances caused by the coronavirus pandemic.
Despite previous amendments to the law, the incumbent insolvency system is still burdened with unnecessary formalities, bankruptcy procedures take too long and often do not result in the overhaul of sustainable debtors.
The amendments regulate mechanisms for early warning to debtors facing financial problems to start restructuring their business.
Sustainable businesses will be ensured access to pre-bankruptcy proceedings that will enable them to continue operating, and insolvent or overindebted enterprises to continue business by writing-off debts.
The status of workers has been improved too with the timely notice of the bankruptcy to the Croatian Health Insurance Fund so that their rights pertaining to healthcare benefits are not jeopardised.
The amendments also introduce restrictions related to who can be a bankruptcy trustee. The amendments strengthen trustees' responsibility and provide them with an opportunity to sit for a professional examination for anyone with a post-graduate degree in law or economics.
Lawmakers also adopted the Consumer Bankruptcy Act which sets the conditions to conduct regular bankruptcy procedures for debts of HRK 20,000 instead of the current HRK 30,000 as well as reducing the period to check a consumer's conduct from five to three years.