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September 25, 2021

Justice Ministry: Purpose of Insolvency Law on granting a recovery chance to viable debtors not reached

The purpose of the new Law of insolvency in regards to granting a chance to the viable good faith debtors in order to recover, wasn’t reached yet, according to a message by the Justice Ministry.

“So far we can say that the market responded positively to the Insolvency Code, to the novelty solutions and to the change of approach upon balancing the parties’ protection mechanism, encouraging an early recovery, increasing the debt recovery and the reduction of the procedure’s length. However, according to the statistics, the purpose of the law granting a chance to the viable good faith debtors in order to recover, wasn’t reached yet. If in 2013 there were opened 1,073 procedures regarding judicial reorganization, in 2015 only 293 reorganization plans were approved. It’s being noted that the judicial reorganization share is approximately the same,” says the Ministry.

According to the institution, the number of insolvency files has dropped significantly.

“In 2015 there were opened 9,783 insolvency procedures compared to 2013 when 29,725 procedures were initiated. Since 2013 was an entire year, we took it as reference, because in 2014 procedures were opened based on the former law from 2006 and on the basis of the 2014 law. Consequently the number of files concerning the same matter has dropped following the economic revival, but also due to the new regulation,” the quoted source mentions.

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