Significant Amendments to Enforcement and Bankruptcy Law Introduced
The Law amending the Enforcement and Bankruptcy Law and Other Laws (the Amendment Law) was published in the Official Gazette 30361 and entered into force on 15 March 2018. The most significant amendments introduced to the Enforcement and Bankruptcy Law are:
- the abrogation of the postponement of bankruptcy procedure; and
- the adoption of a more efficient and functional structure for the composition with creditors procedure, which is a court-approved agreement between debtors and creditors.
The composition with creditors procedure is regulated under the Enforcement and Bankruptcy Law, but has not been actively used in practice. In order to create a more effective and functional composition with creditors procedure, the following amendments have been made:
- The periods concerning composition with creditors procedures have been shortened.
- The courts having jurisdiction have been changed from enforcement to first-instance commercial courts.
- Detailed announcement and notification procedures have been regulated in order to:
- establish the certainty of the procedures until the composition with creditors is approved; and
- increase the ability of creditors to collect their receivables.
- Documents to be attached to a composition with creditors have been redefined with a view to monitoring the debtor’s financial situation in a clearer and more detailed way.
- An efficient method has been established to:
- assure the conclusion of a composition with creditors and avoid the debtor’s bankruptcy once the composition’s conditions have been met; and
- allow for the continuation of the debtor’s commercial activities.
Additional amendments introduced include:
- the introduction of an order regarding the priority rights of pledgees on sales prices; and
- the shortening of the period for the bankruptcy office to decide on the type of bankruptcy and creditors’ list.
In addition, in the liquidation of a bankrupt estate and the encashment process in enforcement proceedings by way of seizure, the liquidation of goods and rights (which form a commercial integrity or are established to generate a higher revenue when sold together) as a whole has been made mandatory.
First published by ILO – Insolvency & Restructuring Newsletter, in 29.06.2018