Ljubljana, 15 April (STA) - The cabinet has adopted a reform bill for the financial operations, insolvency proceedings and compulsory dissolution act in a bid to streamline insolvency proceedings. Justice Minister Ales Zalar said the proposed measures are part of the exit strategy and enable quicker restructuring of insolvent firms.
One of the main features of the bill, said Zalar, is that it enables creditors to supply fresh capital to a company when the owners fail to. "If the owners do not take care of the short-term liquidity of a company, there is no reason that their interests should come first."
Moreover, the provision also enables third-party investors to provide the fresh capital in insolvency cases where the owners fail to do so.
The bill, which will be sent to parliament now, also includes new provisions on personal bankruptcy for sole proprietors which allow them to make a fresh start under the guide of an administrator.
In a bid to streamline insolvency proceedings, the bill envisages universal jurisdiction for bankruptcy proceedings at district courts. This would also considerably disburden local courts in enforcement proceedings.
Due to criticism that courts have been applying different practice in deciding about legal means in insolvency proceedings, the bill proposes delegating all second-instance cases to the Ljubljana District Court. The court already gets more than half of all appeal cases in these proceedings.
Court clerks are to be entrusted with simple procedural acts in insolvency proceedings, while the amendments also create the legal framework for electronic communication with lawyers and official receivers, which is to help save money and speed up proceedings.
The motion does not bring major changes in the chapter on creditors, but only improvements, such as the option of calling meetings of creditor committees in locations outside the seat of the court in charge of the proceedings.
The reform bill also includes provisions safeguarding the rights of workers in cases of insolvency, said Zalar. Companies and sole proprietors who fail to pay their workers for three months in a row would be automatically declared insolvent and subjected to receivership proceedings.
The state will also no longer register tax debt from the last tax year as priority claims in order to increase the total bankruptcy estate, thereby raising the possibility that employees will be paid out some of their wages.
Under the proposed reform bill, a chamber of official receivers would be established and its membership would be obligatory. Oversight of the work of receivers would also be bolstered, while receivers dealing with bigger companies would have to have at least two years work experience, said Zalar.