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Understanding the Bankruptcy Laws in Serbia

November 10, 2017 by Nebojša Stanković

When investing in a foreign country, the legal team of the investor has to get familiarized with the country’s laws. It is of utmost importance to know the legal boundaries and to operate within them in order to avoid penalties, legally combat unforeseen circumstances and practice the different privileges and rights that the law affords them.

One of the laws that deserves your undivided attention is the Bankruptcy Law. By getting familiar with it, investors will learn how to collect payments that are late or the ones that they were unable to collect in the past. Here is the information that will help you better understand the Bankruptcy Laws in Serbia.

National Bank of Serbia Regulations

If a company has a blocked account in the National Bank of Serbia longer than the law allows, the National Bank of Serbia is obligated by law to declare bankruptcy to this company and to inform the Economic Court of Serbia of the current developments in this case. It is important for foreign investors to know that the majority of these cases were discarded by the Economic Court.
The practice in Serbia has shown that the owners of such insolvent or bankrupt companies usually register new companies because this section of operations is still not regulated by law. In order to protect yourself as a foreign investor, you have to learn how to identify these companies. Check the following chapter for more information.

Carefully Pick Your Partners

Law books

When you want to invest in a business in Serbia, it is important to know if your future subject has positive or negative financial liquidity. This is really important, as it will point out the viable business entities worth investing in. Thanks to the latest efforts made by the Serbian government, foreign investors can now access a register of subjects and see the financial liquidity of numerous businesses.

At the moment, this list contains only the businesses which have negative financial liquidity or are bankrupt. Make sure to look up your future partners on this list before you strike a deal and make an investment. This way you will ensure that your finances will go into development, instead of paying someone else’s debts.

New Changes of Bankruptcy Laws

The Government of Serbia has made many changes to the existing Bankruptcy laws. It is important to know that if you as an investor have a plan to reorganize such a company after investing it, you have 90 days to submit it to the Economic Court. The time starts to count starting with the date the company has declared bankruptcy or was declared insolvent or bankrupt by the National Bank of Serbia.

The Economic Court can extend this period for 60 days, if you as an investor provide an explanation why the plan for the reorganization is delayed. If the stockholders provide additional arguments to explain why the plan for reorganization is delayed, the Economic Court can delay the deadline by an additional 60 days. This practice provides more time for planning the reorganization and the reorganization of complex business entities found in Serbia.

Bankruptcy Laws in Serbia are not that strict and allow foreign investors not only to identify the viable partners, but to also invest intelligently and minimize the risks involved with making investments in foreign markets, industry and economy.