NOVELTIES AND PROBLEMS IN IMPLEMENTING THE BANKRUPTCY LAW IN THE REPUBLIC OF CROATIA

In recent years there has been an increasing number of companies that face problems of insolvency for several years without filing for bankruptcy. The basic purpose of bankruptcy proceedings is to preserve the value of company’s assets and at the same time protect the interest of creditors. In Croatia, bankruptcy proceedings, usually last from 3 to 5 years but there have been cases where the proceedings have lasted up to 10 years. Excessive length of bankruptcy proceedings leads to signifi cant increase in bankruptcy costs, which results in further deterioration of company’s value. In some cases, costs of bankruptcy proceedings amount to 90% of company’s assets which adversely affects the creditors. This situation has brought about the need for revising the legal framework and resulted in an adoption of the new law on financial operations and pre-bankruptcy agreements which went into force in October 2012. Therefore, this paper deals with the problems present in the implementation of bankruptcy legislation, as well as those arising due to the inconsistencies and ambiguities in the new Financial Operations and Pre-Bankruptcy Settlements Act . Based on the presented critical considerations, the authors give suggestions for the improvement of prebankruptcy settlements and the overall legal framework related to bankruptcy thus eliminating major causes of problems encountered in practice.